Here are some bits and pieces I highlighted for investors over the last few weeks. Thanks as always to BNP Paribas Cadiz Securities for allowing me to republish these snippets here … it is also a touch more information that most people require, but I post it here for the record, if nothing else.

I write these under considerable time pressure – deadline 06h30 0n Monday mornings. They can sometimes be a bit scrappy, but mostly (although with exceptions) still relevant a few weeks later. Where I say ‘yesterday’ or ‘today’ (or whatever) I mean: relative to the date in the highlighted headline above each section. The newest is on the top – stretching all the way back to the ancient history of Nkosazana Dlamini-Zuma at the US-Africa summit in Washington.

01/09/2014

Lesotho, South Africa … and the Guptas

Lesotho Prime Minister, Thomas Thabane, was assisted by South African special forces soldiers to flee to South Africa in the face of a military backed ‘coup’ on early Saturday morning. The ‘coup’ (or ‘coup attempt’ – both terms are used extensively in the coverage) was allegedly orchestrated by Deputy Prime Minister Mothetjoa Metsing.

The key features of the event were the co-ordinated encircling of police barracks by the military, the disarming of the police and the seizing of the national broadcaster in the country’s capital Maseru on Saturday. (Sunday Times, Voice of America, City Press, Sunday Independent – 31/08/2014).

The Sunday Times story suggests the ‘coup’ was sparked by Friday’s firing of army chief Lieutenant-General Kennedy Kamoli by Lesotho’s King Letsie. The City Press reports that South African troops are on standby for further interventions.

Lesotho army spokesman Major Ntele Ntoi has denied there was a coup and says the army’s actions were purely to disarm police “who had been preparing to provide weapons to political parties” – Sunday Times.

Thabane, in a phone interview with Voice of America, said he was not going back until his safety was secured, that there was a situation of “total indiscipline” in the army and that soldiers were “running around the streets, threatening people” and “quite openly stating that they want my neck” – see here for VOA coverage.

So what?

This is almost too bizarre to type out, but here goes: a significant portion of the coverage of the event refers to the recent controversy surrounding the issuing by Thabane of diplomatic passports to the Gupta brothers (who we know better as key Zuma and ANC backers and funders, see Mail and Guardian coverage “The Grim Tales of the Brothers Gupta” for background).

At the time of the appointment Thobane said “(t)hese people (the Guptas) are good friends of the ANC and we have good relations with the ANC … I was introduced to them by ANC president [Jacob Zuma] and other ANC officials… I then appointed them to help scout for investment in my country. They have influence in a number of countries that can help Lesotho” – see here for that story.

In highly interpenetrated and interdependent systems of patronage and corruption, unsuccessful attempts to defend one part of the system can unravel the whole system and cause destabilisation throughout the linked networks.

Jacob Zuma’s Russian rest

Jacob Zuma visited Russia this week for six days. He had a light schedule and was, unusually, only accompanied by State Security Minister David Mahlabo and Deputy Minister of International Relations and Cooperation Nomaindia Mfeketo. There has been widespread but largely fruitless speculation about what the President was doing in Russia. (See City Press’s “Jacob Zuma’s mysterious mission to Russia” and former leader of the opposition DA Tony Leon in the Sunday Times in an opinion piece titled “How much more abuse can the constitution take from Zuma?” … unfortunately can’t find a link to that.)

So what?

The crisis faced by Russian President Putin is, by all accounts serious and urgent – and it might seem unlikely that he would have made time for a casual tête-à-tête with Jacob Zuma. Thus we can assume that Putin was in part motivated by wanting to demonstrate he still has friends in an increasingly chilly world. Also there is the sourcinig of agricultural products to fill the gaps left by European and US sanctions against Russia over Ukraine – a job South Africa could be well placed to do.

However Jacob Zuma appeared less to be representing South Africa and more on a personal visit – with several reports, including from government, that he would use the opportunity to rest.

It is difficult to escape the perception of two embattled leaders involved in a perhaps complicated exchange and attempting to secure their present and future:

there is the upcoming ZAR850bn nuclear build programme that probably depends on Jacob Zuma staying at the helm in South Africa – Russia reportedly hopes to be central to that programme.

Jacob Zuma’s key spy chiefs all reportedly resigned when he (Zuma) refused to allow them to investigate the Gupta brothers as a serious threat to national security (see back story on that here).

Jacob Zuma faces unprecedented blowback at home, including the possibility of a public discussion around the original fraud, corruption and racketeering charges against him (see here) now that the famous Spy Tapes are to be handed to the Democratic Alliance in the official opposition’s attempts to have the National Prosecuting Authority’s decision not to charge Zuma reviewed.

Also in yesterday’s Sunday Times was an important ‘leaked’ story that South Africa had sent a large group of intelligence officers to be trained in Russia and that “the Russians have recruited at least four of our people, which means we are sitting with double agents” – according to an unnamed source “with inside knowledge of the programme” – Sunday Times 31/08/2014.

Jacob’s Ladder (geddit?) and check out the body languege (Pic from GCIS)

It is not inconceivable or unreasonable to consider the possibility that Jacob Zuma is asking for intelligence and security coverage and offering in return nuclear contracts and public expressions of support. It’s not a perfect theory, but some kind of explanation is required.

Ruling alliance divides itself neatly on defending or attacking the public protector – is Jacob Zuma becoming a cost the ANC cannot bear much longer?

Zwelinzima Vavi, Cosatu general secretary, broke ranks with the ANC on Saturday arguing that the Public Protector’s recommendations on resolving the Nkandla dispute (in which over ZAR200 million of public money was spent irregularly on Jacob Zuma’s private house) should be implemented immediately … “all of them, without exception.” Vavi went on to say that criticism of Madonsela were “absolutely disgusting, to say the least”– Vavi in the Sunday Times 31/08/2014.

So what?

While the main structures of the ANC and its government attempt to close ranks around Jacob Zuma as the multiple scandals unfold and the threats against him grow, the hegemony is crumbling and the edges.

The ANC still has a comfortable electoral majority although as I have pointed out on many occasions, at least part of the electoral declines the ruling party experienced in May, especially in the sophisticated metropolitan areas of the economic heartland of Gauteng, have to do with perception of corruption and mismanagement at the top. It is difficult not to concur with the implicit meaning of the headline of Barney Mthombothi’s column in the Sunday Times yesterday which reads: “ANC courts its own destruction”.

We must consider that the cost of defending Zuma’s multiple infractions is starting to tell on the ANC (as it is telling on the party’s alliance with Cosatu).

I would reason that the ANC’s brand value is being seriously impacted by Jacob Zuma’s presidency and that, almost as a natural law, such a threat to value will call into being an attempt to defend the value by those who have the most to lose (other leaders and members of the ANC)

It’s the future, so I am guessing, but I think it is an even chance that Jacob Zuma will be moved into retirement within the next two years and that the official reasons will be related to his health.

(This added as I post these comments here: the above several paragraphs might be wishful thinking. If you want to see a well reasoned opinion that takes the opposite view, see the interesting Daily Maverick column by Ranjeni Munusami arguing that Zuma will see out his second term. I suspect that I just can’t live in a world where the thugs get away with it for ever (this paragraph was edited after posting – Ed)

The Ebola (haemorrhagic fever) epidemic ‘sweeping’ West Africa has killed approximately 1500 people and the first cases have been confirmed in Senegal, having up until now being confined in Sierra Leone, Liberia, Guinea and Nigeria.

So what?

Ebola was first identified in the north of the Democratic Republic of the Congo in 1976 and outbreaks have been common in Central and Western Africa since that time. The disease is isolated and confined to countries with weak public health systems and high levels of poverty. In all the news coverage, the headlines tend to be more alarming than the content of the stories. There are various experimental drugs in trial (including one made jointly by GlaxoSmithKline and the US government which has achieved high levels of success) – Sunday Independent – 31/08/2014.

25/08/2014

Pay Back the Money … or we’ll huff and we’ll puff

Julius Malema and his cohorts in the National Assembly didn’t quite blow the House down on Thursday last week during President’s Question Time.

They disrupted parliament by demanding that Jacob Zuma pay back a portion of the costs of upgrades to his Nkandla home, as specified by the Public Protector Thuli Madonsela. Their chanted refusal to accept the stock brushoff from Zuma and the poor management of the showdown by Baleka Mbete, Parliamentary Speaker (and ANC National Chairperson), is the leading edge of yet another storm that concerns Jacob Zuma’s integrity – and the ability of the constitutional mechanisms to hold him to account. (Here for a useful and interesting take on festivities.)

But political theatre becomes something more serious as the Public Protector and the ANC and its allies go head-to-head on the issue

Several Sunday papers reported yesterday ( 24/08/2014) that the Public Protector Thuli Madonsela has sent a letter to Jacob Zuma criticising several aspects of his response to her Secure in Comfort report and specifically arguing that he (Zuma) did not have the constitutional right to set aside or review her findings or to allow Police Minister Thathi Nhleko to do so (in essence Zuma has asked Nhleko to determine what his – Zuma’s – financial obligations are with regard to the Nkandla security upgrades).

According to constitutional law expert Pierre de Vos Madonsela is well within her rights. “This is not legally controversial,” he says, quoted in today’s Business Day (25/08/2014). “The president is either receiving appallingly bad legal advice or he is wilfully abusing his power and thwarting the law to protect himself in order to unlawfully benefit financially from the state.”

Both the ANC and the SACP came out late yesterday afternoon strongly critical of Madonsela, arguing that she had overreached herself, especially as a parliamentary committee was currently dealing with the matter.

So what?

The clash in parliament on Thursday made a significant media impact and it seemed for a moment that the damage being done the ANC by the party endlessly having to defend its wayward leader could conceivably lead to some profound political realignment.

But that feeling was brief.

The EFF has 25 MPs in the National Assembly, to the ANC’s 249 and the DA’s 89. The chances are, the ANC in parliament will work out a set of rules that essentially disciplines the EFF (already MPs may be suspended for not more than 30 days and have their salary docked for the same period).

Jacob Zuma is a master at diverting crises like this into long (perhaps endless) processes that have a degree (or at least a semblance) of legitimacy and constitutionality. And there is a parliamentary process dealing with Nkandla underway and whether this process is an attempt to ‘set aside or review’ the Public Protector’s findings could be the subject of years’ of constitutional debate, such that many of the players will be long gone by the time it is resolved.

There is considerable stability in a system so tightly bound within itself through links of patronage and shared loyalties – although I suspect that when such a system eventually unwinds, it unwinds quickly and perhaps catastrophically.

Jacob Zuma is off for a week in Russia – to work and to rest – and the game will go on. “The visit will further strengthen the excellent bilateral relations with a view to consolidating and opening new avenues towards job creation, skills development, exchange and transfer of technology and trade and investment,” said the Department of International Relations yesterday.

There may be some future moment when the ANC could face electoral losses because of public perceptions about corruption of its leaders, but that day is still far enough ahead to not impact (in any meaningful way) upon behaviour in the present.

(So … that isn’t a direct contradiction on what Nic thought on September 1, but it is more than a little close. I strongly suspect it might be a biorhythm, or hormonal thing – Ed)

Julius Malema … how did he ‘Pay Back the Money’?

Julius Malema appears in court today to face questions about where he got the money to pay his R18 million tax bill. According to Rapport newspaper (24/08/2014) the South African Revenue Service (Sars), would ask for a two-month extension of Malema’s provisional sequestration to determine where he got the money to repay his tax debt each month. The newspaper reports that “impeccable sources” allege that “cigarette smuggler Andriano Mazzotti was helping to pay his tax debt” – as re-reported at the Independent Online 25/08/2014 – see here. (I don’t know the Afrikaans language Rapport newspaper well – it is part of Naspers’s Media24 stable – treat the claim with maximum caution). (Not because of Naspers of Media24 – for so are they all, all honourable men … the caution is purely because the claim is faintly outrageous, which doesn’t mean it’s not true – Ed)

So what?

While Julius Malema’s insistence that Jacob Zuma account to parliament is welcome, we should be careful to not lose our sense of discernment. Julius Malema himself has faced a long list of accusations similar to those he is making against the ANC and Jacob Zuma.

Land and wage reform – unintended consequences

Two interesting articles in the Sunday papers hint at some of the negative unintended consequences of attempts to protect the interests of the marginalised and vulnerable workers on South African farms.

Firstly, the Sunday Times (24/08/2014) has a colour piece titled “Good intentions pave the road to rural hell” in which the 1997 Extension of Security of Tenure Act is assessed as having “led to as many as a million farmworkers being evicted countrywide”.

Secondly, the Sunday Independent (24/08/2014) records an interesting discussion about the impact of ‘minimum wage’ determinations on employment. The article shares different views on the matter, but concludes that in SA agriculture “the impact was devastating: Employment fell from 819 048 jobs in 2002, just before the law came into effect, to 623 750 jobs in 2003 and continued to decline to 555 549 jobs in 2007 – a net loss of almost a third in five years.”

So what?

The ANC has signalled an urgent desire to ‘get serious’ about land reform. As we have mentioned previously ‘the land question’ seems to suggest to the ANC an answer to a host of social needs: employment, housing, food security, and black economic empowerment, to name only the most obvious. Racially unequal land ownership patterns (it is generally quoted that SA had 87% of land in white hands at the 1994 transition and that less than 8% has been redistributed since – see here) are also a driver of political dissatisfaction, perhaps helping feed the growth of the EFF and other ‘radical’ forces emerging in the society.

For now government is preparing a host of new legislation and regulation all the while signalling to commercial agriculture that it wants to be met half-way. There will probably be unintended consequences of government’s land reform and rural development programme (including negative impacts) but the lessons from the banking sector (for example with regard to the formulation of the National Credit Act) is that it is always a better idea for the private sector to go out and engage with government and attempt to shape legislation than it is to wait and deal with the future when it is a fait accompli.

21/08/2014

Mining, oil and gas sectors: legislative and regulatory drift and a scary audit

Mineral Resources Minister Ngoako Ramatlhodi didn’t calm nerves last week during his address to the third annual Mining Lekgotla. The minister is overseeing two significant regulatory processes causing anxiety in these sectors, namely a major audit of mining companies’ compliance with the 10 year targets of the Mining Charter and the signing into law of a bill amending the Mineral and Petroleum Development Act of 2002 (which the private sector thought it had essentially cautiously agreed to in exchange for it – the private sector – being consulted in detail about the regulations that would arise from the legislation).

With regard to the audit, Minister Ramathlodi said: “(w)hile the review process on the implementation of the Mining Charter is still under way, initial results suggest that whatever compliance we may have achieved, much more work still needs to be done” – Business Day -14/08/2014

With regard to the legislation the Minister said he had not been informed by the Presidency whether or when the bill would be signed into law. “There are legal teams that look at any legislation coming before the president and they advise him. When they do so we’ll act on that advice” – Business Day ibid. Download Minister Ramatlhodi’s full address at the DMR website here.

So what?

Firstly, the audit obliges the mining companies to meet various ‘transformation’ obligations and targets by 2014 e.g., 26% of the company must be owned, through “full shareholder rights”, by HDSA (Historically Disadvantaged South Africans) by the end of this year – as a precondition for the retention of the mining right. Go to www.dmr.gov.za to see the “Mining Charter” and the “Scorecard for the Broad-Based Socio-economic Empowerment Charter for the South African Mining Industry” to get a full view.

2014 is the year in which several definite obligations must be met by the mining companies and there is a degree of nervousness by investors and management as to how strict the audit will be, how much leeway the ministry will give and how severe the consequences of failure will be.

Purely the administrative aspects of the reporting process are enough to be a serious burden for smaller mining companies, according to Nic Dinham, Head of Resources at BNP Paribas Cadiz Securities

The apparent prevarication in signing the Mineral and Petroleum Resources Development Act Amendment Bill, after months of careful negotiations between the department and the mining companies, has caused the industry to worry that deals struck and compromises made might be up for renegotiation. There was a general expectation that the constitutionality of the amendments would need to be tested and examined (especially government’s 20% proposed free-carry interest in all new exploration and production rights in the oil and gas sector). It appears to me that the delays are adding to a more generalised sense of uncertainty about the growing regulatory burden and costs associated with continuing to mine in South Africa.

Amcu set to go on the offensive at Num’s last toeholds in the Platinum sector – non-cyclical risk factors in the SA labour environment escalate

Nic Dinham (BNP Paribas Cadiz Securities Head of Resources referred to in a previous section) said yesterday that in the platinum operations where Amcu is not (yet) the major union (at several mines, but including those operations at Aquarius Platinum and Northam Platinum) there were significant indications that Amcu was close to recognition thresholds (specific to each company) and that it was reasonable to expect increased labour unrest at the particular operations and companies where Num was clinging to a majority.

“During the recent result presentations, several companies reported that operations previously dominated by Num are showing signs of losing ground to Amcu, especially in the Rustenburg areas”, said Dinham.

“This is the case at Aquarius Platinum as well as at Northam where Amcu membership has risen to 30% and 15% respectively, just short of both companies’ recognition levels. Clearly, this could be the harbinger of more labour storms to come. At the same time, only small numbers of workers in the existing Amcu fortresses switched to NUM after the end of the strike. So, despite all the rational arguments about the financial impact of the strike on labour, Amcu appear to have won the propaganda war with the mining industry” – Nic Dinham, 20/08/2014.

So what?

There are a number of important implications, not least of which is the confirmation (and deepening) of the implicit defection of mineworkers in the Platinum sector from a key ANC aligned union (Num) and the continued disintegration of previously powerful trade union federation and ANC ally, Cosatu.

In some ways this frees the ANC (and government) to decide on economic policy without having to kowtow to Cosatu, but it will also raise anxieties in the ruling party about the narrowing of its base – and a diminishment of its hegemony and moral authority.

None of that is necessarily a bad thing. It is my opinion that our legislative and regulatory environment has tended to suffer from a lack of clarity and focus as a result of the ANC attempting to keep a number of different legacy constituencies (and sectional interests) happy and on-board.

However, it is also worth noting that my general expectation of a deteriorating labour environment is strengthened by concerns about labour unrest driven by further contestation between Amcu and Num. This, together with a coming trial of strength in all (or most) Cosatu unions that will accompany the impending Numsa split out of Cosatu will be a strong, non-cyclical, driver of labour unrest for the next 18 months. Jeff Schultz (BNP Paribas Cadiz Economist) and I recently suggested that these strands driving labour unrest, along with what we expect will be a major confrontation that will accompany the lead-up to the expiry of the current 3-year public sector wage agreement in March 2015, will keep labour risks at elevated levels in the South African investment environment for at least another 18 months.

Cyril Ramaphosa – a hard week down at the Commission

Deputy President Cyril Ramaphosa last week faced an avalanche of criticism and heckling at the Farlam Commission (which is investigating the killing of 44 people at Marikana on and before August 16 2012 in the context of the protracted strike at Lonmin mines in the Rustenburg area at that time).

Cyril Ramaphosa was called to the commission to explain his actions in the lead-up to the Marikana killings. Ramaphosa was on the Lonmin board at the time and in an email to Lonmin managers he said: “(t)he terrible events that have unfolded cannot be described as a labour dispute. They are plainly dastardly criminal and must be characterised as such. In line with this characterisation there needs to be concomitant action to address this situation.” In another email he urged then police minister Nathi Mthethwa to “take appropriate steps”. In both these cases I have added the emphasis.

At the Farlam Commission hecklers shouted “Blood on your hands” (City Press 11/08/2014) during Ramaphosa’s cross-examination. Hecklers wore T-shirts with several different slogans criticising Ramaphosa’s wealth, for example one showed a buffalo in reference to the fact that Ramaphosa bid – unsuccessfully as it turned out – R19.5 million for a buffalo cow and her calf at a wildlife auction a month after the Marikana killings in 2012.

So what?

There is a high level of speculation as to whether Cyril Ramaphosa will succeed Jacob Zuma as president (when the current presidential term expires in 2019 or at some earlier date due to Jacob Zuma’s purported ill health.) There appears to me to be a widespread assumption in the financial markets that Cyril Ramaphosa, as an experienced businessman and an experienced negotiator and conciliator who was central to easing the transition at Codesa 1 and 2 in the early 90s, would be more sensitive to the needs of the private sector, more compliant with global capital markets and, generally, run a cleaner and more efficient ship.

Implicit in that list of attributes is the person who Ramaphosa would be cleaner than, more conciliatory than, more understanding of private sector needs than, is Jacob Zuma. It is impossible to know either that Ramaphosa really has such attributes relative to Zuma or that it is really or primarily those attributes that make Ramaphosa a more attractive choice than Zuma for the financial markets … or, in fact, whether the ‘financial markets’ really makes these kinds of distinctions.

It is my impression that Jacob Zuma’s rise to power and performance as president has been accompanied (and in several cases directly caused) increased political risks associated with investing in the country. Almost any successor would probably be welcomed by the markets. However we would be cautious about seeing Ramaphosa as the knight in shining armour. He is badly damaged by his link to the Marikana killings (unfair as that may be) and he has not yet established a significant constituency within the ANC. The fact that he is a rich man can play both ways; it gives him resources to build his case but it makes him vulnerable to accusations of conspicuous consumption and being out of touch with common people. It is also inescapably true that his wealth has been accumulated more as a result of ‘empowerment deals’, the accumulation of large slices of equity, rather than the involvement in any of the underlying activities (mining, banking, health care etc).

More than anything we must keep front of mind that much ANC policy and politics is determined in the forums of the party – long in advance of such policies and politics becoming law and regulation. The particular character of leaders makes a difference, but in the South African case, not as big a difference as it might elsewhere.

The noise around land reform is (partly) bluster designed to get commercial agriculture to act voluntarily

Urging Commercial farmers to take voluntary steps ‘advancing the transformation project in the agriculture sector’, ANC Secretary General Gwede Mantashe said “change that is imposed is more painful” – Business Day 14/08/2014. Mantashe told attendees at a conference on land reform and food production that land reform was necessary if South Africa was to deal with the “ugly past of racial land dispossession of black people” and that farmers must never allow themselves “to be victims of change” – Business Day ibid.

So what?

We previously described in some detail some of the legislative initiatives around land reform and one of the points we made about assessing the risks associated with the land reform initiative is reinforced by Gwede Mantashe’s choice of words.

The ANC feels keenly its failure to successfully complete a significant process of land reform and redress – and is, in part, being punished for that failure by the (still slight) electoral traction achieved by the ostensibly more radical Economic Freedom Fighters on their debut in the general election on May 7 2014.

However, the ANC feels, at least as keenly, the threats to investment that would result if property rights were ever threatened by an unruly and uncertain ‘land reform’ process à la Zimbabwe.

Commercial farming does not have the handy (from the ANC’s point of view) equivalent to the mining sector’s mineral rights to attach to a number of ‘transformation’ objectives. The ANC would be extremely cautious about bluntly attaching a ‘licence to farm’ (or in fact a ‘licence to operate any business’) directly to ‘transformation objectives’. There is a line beyond which such rights and obligations could constitute a nationalisation in fact and might be both unconstitutional and, certainly, a serious barrier to future investment.

Thus the ANC, in the form of its secretary general, is snapping at the heels of domestic commercial agriculture, attempting to herd it towards the ‘transformation’ objective, putting the argument that this is the national good, but hinting that a bite on the ankle could be the laggard’s reward. It is an open question as to whether farmers would respond to such incentives with greater compliance or with resistance, both covert and overt. However, for now, we think the ANC’s (and therefore government’s) land reform bark is worse than its bite.

Bits and pieces

Jacob Zuma put out a report last week which he and his spokespeople claim is a satisfactory response to the Public Protector Thuli Madonsela’s, “Secure in Comfort” report into the upgrades to the President’s private Nkandla residence in which she finds several faults with the President’s actions and inactions. The delay, over many months, of a response from Jacob Zuma to Thuli Madonsela was ostensibly as a result of him (Zuma) awaiting a report from the Special Investigating Unit. However, on Friday a spokesperson for the Public Protector said Zuma’s report was not a response, adequate or otherwise, to Secure in Comfort. ““That means a document that comments on the public protector’s report or indicates action taken or to be taken to implement remedial action in compliance with section 3(5) of the Executive Members Ethics Act must still be submitted to Parliament by the president” – my emphasis added.

Jacob Zuma’s team is preparing to hang expense overruns and incorrect categorisation of some items as ‘security related’ on Jacob Zuma’s architect, Minenhle Makhanya. The Mail and Guardian reports that the “Special Investigating Unit has lodged a R155-million claim against Makhanya” – 15/08/2014.

And in other news Bruce Koloane, the former chief of state protocol who was shouldered with the blame for the landing of a large private wedding party at a secure military base by the close Zuma allies and business partners the Gupta brothers and family last year, was nominated by Jacob Zuma as Ambassador to The Hague. In August last year, Koloane pleaded guilty to all charges relating to his involvement in authorising the controversial landing of the jet.

It’s not (just) idle mischief putting these bullets together. If the President’s own actions around his accumulation of personal assets and special favours to his friends can impact on the formal judicial, disciplinary and constitutional oversight functions, if his party can go to extreme lengths to protect him from the consequences of his actions in accumulating personal wealth and influence, it is unlikely that private companies will be trustful of, or willingly and enthusiastically compliant with, the ‘transformation’ agenda emerging from the state, government and party he leads. Ultimately the private sector needs to believe that the value of its various social obligations ends up benefiting those who need the assistance the most. This is the price the private sector seems prepared to pay for stability and growth. Any sense that the public purse is hijacked or that equity transfers and affirmative action obligations have become a kind of asset that can be hoarded and dispensed as patronage by the politically powerful will cause the ‘transformation’ objective – and much else – to fail.

11/08/2014

‘Cabinet leaning to break-up Eskom’ – Business Day 05/08/2014 … I would be extremely surprised

Business Day reported that the idea of breaking up Eskom and privatising some of its power stations “is starting to gain traction in government circles, as a team of cabinet ministers and government officials seeks ways to alleviate the company’s financial crisis and restructure its business” – Business Day 05/08/2014.

The governing ANC’s alliance partner, the Congress of South African Trade Unions (Cosatu) vowed the next day to fight any such privatisation “to the bitter end” arguing that electricity price inflation, driven by the ‘commercialisation’ of the utility in the first place, was “one of the key constraints” on economic growth and an important reason South Africa “is not creating decent jobs the country so desperately needs” (catch the full August 6 Cosatu statement here.)

On the same day Lynne Brown, the Minister of Public Enterprises, said “I want to indicate that there is a portfolio of options for the interministerial task team to consider. To my knowledge Cabinet has not discussed the matter of privatisation and there is no need to unnecessarily raise temperatures around this matter” – City Press Online, 06/08/2014. The ‘task team’ to which she refers was described (in the same story) as “representing energy, public enterprises and the treasury” and further, that the findings of the team had not yet been made public.

So what?

This is, supposedly, a defining issue for the ruling faction of the ANC and its allies in Cosatu and the SACP. Much of the motivation for backing Jacob Zuma (and ousting Thabo Mbeki) was – apparently – that Mbeki’s policies were a species of Thatcherism (especially the plan to privatise the major state utilities). The alliance backing Jacob Zuma defined its historical mission as the combating of this “1996 class project”, a catch-all phrase for neoliberalism, fiscal rectitude and the ‘Washington Consensus’.

It might well be true that the breaking up and privatisation of Eskom is an urgent necessity – or even a precondition for recovery from our dire economic state – but it is a political nonstarter, requiring the complete breakup of the alliance of groups that hold power, and is therefore vanishingly unlikely to happen, even symbolically.

National Prosecuting Authority in free fall and intelligence services are extensively deployed on behalf of senior politicians and criminals – and the storm is beginning to batter against the South African Revenue Service – this is as serious and urgent as it is confusing and complicated

There is an on-going meltdown at the heart of the criminal justice system which is increasing risks in doing business with, or in, the areas administered by the South African state.

Here are only a few of the most recent visible features of the (complex and confusing) disintegration:

Jacob Zuma has asked the National Director of Public Prosecutions Mxolisi Nxasana to give reasons why he should not be suspended. The apparent motivation is that Nxasana has problems associated with his security clearance (owing to his brushes with the law, including a murder charge, when he was a younger man). However, almost all the coverage and analysis suggests that the ‘real reason’ is Nxasana has pursued investigations of key Zuma allies in the NPA and Crime Intelligence Division of the South African Police Service and his (Nxasana’s) actions threaten to lead, eventually, to fraud and corruption charges being reinstated against Jacob Zuma.

Award winning journalist Mzilikazi wa Africa published his memoir last week which includes a detailed account of how Jacob Zuma and his allies vigorously undermined the credibility of the first National Director of Public Persecutions Bulelani Ngcuka by spreading the false information that he (Ngcuka) was an apartheid spy.(See an interesting examination of this thread from Business Day 07/08/2014 here.) In here is the source code of much of the chaos in the prosecuting authority and intelligence service: Bulelani Ngcuka led the original investigation into the allegations of fraud, corruption, money laundering and racketeering against the then Deputy President Zuma, concluding that there was “prima facie” evidence that Zuma was guilty, but not enough to win in court – a statement to which Zuma, not unreasonably, strongly objected.

“Sex, SARS and rogue spies” announced the front page headline in City Press yesterday (10/08/2014). The accompanying stories allege that senior SARS official, Johan van Loggenberg, has been the subject of a ‘honey trap’ operation by the State Security Agency “Special Operations Unit”. The story is Byzantine, but the important bit is the detailed allegation that the secret spy unit operating against van Loggenberg has also been used to discredit and smear a ‘anti-Zuma’ camp in the NPA and in Crime Intelligence. Bizarrely, the Special Operations Unit supposedly includes drug dealer Glen Agliotti. (Read some of this story here and here … if you have the time or the patience.)

So what?

This level of political and criminal infiltration into key state institutions and functions, especially of the security services, the prosecuting authority and the South African Revenue Service raises real questions about judicial, regulatory and legislative certainty in the operating and investment environment. Uncertainty about the application of law, the integrity of the criminal justice system and the functioning of the revenue service must all be considered by anyone wanting to invest in South Africa or in assets regulated by South African institutions of state and law. Frankly, given the deep connections between the instability in these key sectors of the South Africa state and the rise to power of Jacob Zuma I am pessimistic that we have the capacity to fix this problem while the current administration is still in power.

The National Prosecuting Authority has appointed highly respected retired Constitutional Court judge Zak Yacoob to head an inquiry, or ‘fact finding mission’ into its dysfunctional state. Unfortunately Yacoob almost immediately (on Thursday last week while speaking at a workshop at the University of the Witwatersrand) happened to mention that he would have “set aside” the judgement that found Jacob Zuma not guilty of rape in 2006, because he would have put less emphasis on the alleged victim’s sexual history – see here. An outraged African National Congress said it learned of Yacoob’s comments “with shock and dismay” saying they “opened old wounds” and were “an attack on principles of our jurisprudence and the judiciary.” Yacoob attempted to clarify his comments here but either way he is no longer likely to be the instrument that cleans up the National Prosecuting Authority.

Deputy President Cyril Ramaphosa will have to explain today at the Marikana Commission what he meant when emailed other senior Lonmin managers just before the August 12 2012 killing of 34 striking mineworkers at Marikana and said: “(t)he terrible events that have unfolded cannot be described as a labour dispute. They are plainly dastardly criminal and must be characterised as such. In line with this characterisation there needs to be concomitant action to address this situation.” In another email he urged then police minister Nathi Mthethwa to “take appropriate steps”.

So what?

It is unlikely that the Commission will find anything untoward in Rampahosa’s messages. He was, after all, doing nothing other than responding to the growing violence of the strikers and Lonmin’s increasing anxiety about the strike. We are of the view that there is some political harm done Ramaphosa by his identification with mine management and government – and the police killing of the 34 mineworkers. There is a considerable degree of unease within the broad structures of the ANC and the electorate about the Marikana killings. The ANC is obliged to stand with its Deputy President on this matter, but it can’t be comfortable. This will play against Ramaphosa (although perhaps not decisively) in the coming succession contest in the ANC.

Nkosazana Dlamini-Zuma

Chairwoman of the African Union, fresh from pride of place at the US-Africa summit in Washington announced yesterday that she was undecided as to whether to stand for a second term in the AU (her current term expires in 2014 2016) This is inevitably raising questions about whether she will compete with Ramaphosa to succeed Jacob Zuma as president of the country.

So what?

She is in the running – and is clean and capable. She is perhaps more of an insider in the ANC’s power elite than Cyril Ramaphosa and her winning this race might mean (unwelcome) continuities with the current administration. It’s too early to call it one way or another, but the ANC Women’s League has indicated that it could back Dlamini-Zuma (or Baleka Mbete) while the Gauteng ANC has indicated it could back Ramaphosa. Officially succession would only take place after elections in 2019, but there are constant rumours that Jacob Zuma might want to retire early (or be forced to do so due to failing health). An early retirement of Jacob Zuma would probably be a significant positive for perceptions about South African political risk, but the specific circumstances of such a move would determine whether it would, in fact, be positive, negative or natural.

For a long time Julius Malema is the Coming Man was the most viewed and most commented upon article here. (Later this post about Chris Hani became ‘most viewed’ if not most commented upon.)

Remember, when I wrote this, Julius Malema was firmly ensconced as ANC Youth League president. It was a full 11 months before the defining showdown at the National General Council (11-13 October 2010) where Julius Malema was the sharp end of an attempt to force the ANC to adopt a position on the nationalisation of South African mines – read the exhausting, if not exhaustive, details about that here.

From then on Malema’s relationship with the top leadership of the ANC deteriorated until he was suspended from the party in November 2011 and on the 4th of February 2012 the appeal committee of the ANC “announced that it found no reason to “vary” a decision of the disciplinary committee taken in 2011,but did find evidence in aggravation of circumstances, leading them to impose the harsher sentence of expulsion from the ANC” – Wikipedia

I think it is interesting to read 5 years later. Not that it was ‘true’ then or now. It’s just interesting. Given the last few days … also I think it (the article) implicitly relies too much on a ‘big man view of history’, gives too much prominence to the idea that ‘leaders’ make the crucial difference in how things turn out … something I will deal with some time in the future.

I am not endlessly going to repost old blogs. I am busy with a news update that should be out here during the next 24 hours.

Julius Malema is the Coming Man

PREPARE YOURSELF

Take a deep breath, put your shoulders back and look through the frenzy.

Reading the Democratic Alliance’s Diane Kohler Barnard pour scorn on the “rotund” and “Idi Amin-like” Julius Malema I couldn’t help but think that she is leaving herself as few choices as J.M. Coetzee leaves his fictional characters.

Julius Malema is a powerful contender for future ANC leadership – and is already a powerful politician. I think his rise to lead the ANC and possibly the country may be unstoppable. I fear that Barnard’s feisty and admirable rhetoric leaves her, and those she represents, no paths upon which she might ride her high horse back, when this is all over.

Barnard, recounting how Malema allegedly attempted to bully his way through a traffic violation with : “Don’t you know who I am?” arrogance, says:

[Julius Malema is] the man who believes there is one law for South African citizens, yet another law for him. He is the man who will slap a neighbour who has the temerity to ask that the music at his housewarming be turned down at 3 in the morning. He is the man who has turned hate-speech into an art form […]

Barnard’s anger is palpable as she sneeringly reminds us that Malema has said he would fire Thabo Mbeki and any ANC parliamentarian “should he get the urge”

Malema’s ego and contempt for the law the rest of us must respect, is unparalleled […] Is this, to quote the President, someone you honestly believe is a ‘leader in the making – worthy of inheriting the ANC”?

Well, is he “a leader in the making”? Is he “worthy of inheriting the ANC?”

The answer to the first question is: “yes” – more about that below.

The answer to the second question is irrelevant. Could we agree what this historical artefact: “the ANC” is; could we agree on what its characteristics and values are? Could anyone make this judgement call?

Frankly, history can give a fig whether you or I think Julius Malema is worthy of inheriting the ANC – or, quite frankly, whether the ANC is worthy of inheriting Julius Malema.

This is not about what you or I think or believe or hope for; it is also not about what Diane Kohler Barnard and the Democratic Alliance and those they represent hope for and hope to accomplish.

This is not, unfortunately, about how things aught to be, or about what is fair and just in the moral universe.

This is about how things are; this is history as a raging torrent.

A de facto leader

Assuming “leader” is neither complimentary nor derogatory – the word can be either or neither – it is clear that Malema more than fits the common sense meaning of the term.

Malema has been hot-housed as a boy in ANC training institutions and groomed for leadership after joining the organisation at the point of its unbanning in about 1990;

He has led the two key feeder organisations, the Congress of South African Students and the ANC Youth League;

He has become the crucial port of call for politicians and individuals hoping to build support for any initiative that requires ANC support;

He personally played an important role in the rise to dominance of the faction that backed Zuma for president;

He is the only ANC politician – aside from Jacob Zuma – who has a significant and deliverable mass base; both numerous and militant;

His rhetoric (in my opinion) is closer to the views of the core constituency of the ANC than the publicly expressed views of any other South African politician;

His name/face recognition is almost unparalleled.

Julius Malema was born in the Northern Transvaal (Limpopo Province) and raised, like Jacob Zuma, by a single mother who worked as a domestic worker. This is the hard school of South African life and these kinds of credentials are still highly valued in the ANC.

In the last few weeks Julius Malema has come over all statesmanlike:

He acknowledged Thabo Mbeki’s key leadership role – of the ANC and the country;

He declared the rector of the University of the Free State “one of our own” – thereby helping to defuse growing racial conflict on that campus.

This is deliberate marketing, evolving the brand [firebrand to Dollar Brand …] while the news media, opposition politics and certain dinner table discussions remain obsessed with each new Malema gaff or his latest confrontational tirade.

It is striking how similar the Julius Malema story is to the Jacob Zuma story.

The human need is to normalise the inevitable or the inescapable present. Three years ago media and dinner table sentiment about Jacob Zuma was almost identical to the sentiment held by the same groups of people about Julius Malema today.

The central dilemma in J.M. Coetzee’s Disgrace.

Is accepting – and trying to get your head around – the present and future leadership role of Julius Malema the moral equivalent of the choices made by J.M Coetzee’s Lucy, the daughter of main character David Lurie in the 1999 novel Disgrace? Lucy (who is white) is raped and ends up seeking and receiving protection (and more) from Petrus (who is black) who is closely associated with those who raped her in the first place. Even if you have not read Disgrace I think you can understand the dilemma.

Is Julius Malema the Great Defiler – of our constitution, of the bill of rights and of our hopes for non-racialism?

No more than that previous rape accused, Jacob Zuma.

It sometimes feels that Julius Malema is deliberately teasing; upping the ante to cause his opponents to shriek ever louder and sound ever more shrill.

I have no idea whether he has the sense of humour or sense of the absurd to be deliberately inviting the kind of scorn he receives from those Dianne Kholer Barnard represents – and a smattering of those she hopes to represent.

But I have no doubt that it will be Julius Malema who laughs the longest.

Listening to the EFF be the rock against which Zuma’s blithe refusal to account finally dashed itself yesterday I felt briefly elated.

Gangsters! Bashi-bazouks! Yes, PAY BACK THE MONEY! PAY BACK THE MONEY! Billions of Blue Blistering Barnacles!

But after a moment’s reflection I pulled myself, by the ear, back into the vehicle.

“You irresponsible old twit!” I said, my mind drifting back to this blog post from August 24 2010:

Waiting for a saviour to rise from these streets*

Just when all hope flees, as the last good politician still within government leaves his/her post to join the feeding frenzy and as the last decent officials trying to do a public service throw up their hands in disgust; and as the striking workers blockade the last functional HIV/AIDS clinic and trash the streets again; and as the broken bits of the Ruling Alliance go for the kill in their eye gouging, groin stamping gutter fight – just as all hope flees, whose silhouette is it that appears, backlit and heroic, flying in low over the horizon?

“Franco”: General Francisco Paulino Hermenegildo Teódulo Franco y Bahamonde Salgado Pardo de Andrade – and yes, he did keep his armies up his sleevies

Is it a plane?

Is it a bird?

No, it’s … hmm, I’m not really sure.

When things are going as badly wrong as they are going for us, the person to look out for is the one who seems to have been sent by history itself as the solution to all of our problems.

I am not suggesting, as my old Granny used to say: don’t worry, cometh the moment, cometh the man or all’s well that ends well. I am suggesting the very opposite.

This is more of a warning to be careful about decisions we make when we are desperate than it is anything else.

Societies, political parties and whole nations are uniquely vulnerable at times like these. Our desperate need is for someone who can raise an anti-corruption army, is prepared to control the unions, able to fix service delivery and able to make the difficult decisions that will allow job rich economic growth.

The darker and more dire things become – and goodness knows they are as dark and dire as anyone can remember – the stronger our wish fulfilment drive becomes.

Where is the good-looking one, with the strong jaw and the easy, comforting manner, and the very firm but gentle eye and the plan and the promise and the words – and the record, or at least one you can, in your desperation, convince yourself of?

This is the moment in which nice Germans welcomed Adolf Hitler and Spaniards General Franco. King Constantine II of Greece inducted the awful “Regime of the Colonels” in 1967 saying he was “certain they had acted in order to save the country” and there was a (brief) Argentinian sigh of relief when Brigadier-General Jorge Videla overthrew the execrable, incompetent and authoritarian regime of “Evita” – as popular culture has dubbed Isabel Martínez de Perón.

I am not suggesting that a fascist opportunist and criminal is about to present him or herself as the saviour from our woes – or that things are so bad that we risk losing our judgement and welcoming him/her into the stockade. Well, not yet.

But explicitly and implicitly various political factions and individuals have presented themselves as alternatives, and the solution to our current problems.

There’s Zwelinzima Vavi – and whatever kind of workerist paradise he represents – who heroically criticised the media appeals tribunal and has laid about himself with a stout cudgel at all the worst of the cabinet ministers and officials trying to stuff the last tasty bits of the family roast into their distended bellies. And he’s available next year.

Deputy Minister of Police Fikile Mbalula suggested (of criminals) we should “shoot the bastards!” and in so doing presents a kind of law-and-order (and anti-communist) alternative, clearly being supported by the ANC Youth League and tenderpreneurs everywhere.

Lindiwe Sisulu dresses nicely and would be excellent if we ever panicked enough to need a kind of Cleopatra/Boadicea empress to save us.

Tokyo Sexwale is getting the kind of press that suggests he is an effective anti-corruption campaigner and an excellent Minister of Human Settlements i.e. he’s clean and gives good service delivery – and he’s bright, presentable, charming, good-looking and available – very available.

(This added as an afterthought: don’t discount Kgalema Motlanthe as a sort of leftish compromise that we have grown used to and, obviously, Mathews Phosa with his charming Afrikaans poetry and his friendly demeanour and his market friendly comments and his bitter struggle with ANC leader and communist Gwede Mantashe. Also consider a scenario, one I discuss elsewhere, where none of the contending factions achieves dominance and everyone agrees to stick with the burdensome incumbent … all is still possible.)

The National General Council of the African National Congress (to be held in Durban from 20 – 24 September) will reveal the main factions and their key representatives for leadership. The last NGC resulted in a rebellion against Mbeki and foretold his rout at Polokwane. This one is likely to be as instructive.

The point I wish to make here is a simple one. Those who appear to offer solutions must be judged in terms of who they are, what they have done and what they really represent. Just because we are in trouble does not mean we can afford to lose our critical faculties. My long gone Granny would have had two more things to say on the subject: don’t throw the baby out with the bath water, and don’t jump from the frying pan into the fire.

* The title of this post comes from the glorious “Thunder Road” by the inimitable Bruce Springsteen (it doesn’t really fit the story … but I really love the song:

You can hide `neath your covers
And study your pain
Make crosses from your lovers
Throw roses in the rain
Waste your summer praying in vain
For a saviour to rise from these streets
Well now Im no hero
That’s understood
All the redemption I can offer, girl
Is beneath this dirty hood
With a chance to make it good somehow
Hey what else can we do now?

That usually means typos and misspellings that I have failed to find in a rushed edit, but sometimes it means the analysis is … less in-depth (trite? … shallow? … Ed) than I would have liked.

It’s the price of procrastination when chasing deadlines – and one of those deadlines was two weeks ago when I rushed to get a weekly update out just as the news from the Brics summit was coming in. This is what I wrote (tagged on to a longer report about a number of different matters):

Brics bank (16/07/2014)

Leaders of China, India, Russia, Brazil and South Africa met at the 6th Brics summit in Fortaleza, Brazil yesterday. On the agenda is the establishment of a development bank and monetary reserve – eventually together consisting of as much as $200bn in capital reserves and guarantees.

So what?

There are a number of important issues associated with this initiative, but one is that this is a deliberate attempt to institutionalise a shift away from the Western (specifically US) dominated financial system (particularly the IMF, the World Bank and the use the USD$ as the global reserve currency). Such moves are probably historically inevitable and as China, India and Russia – and to a lesser extent Brazil – stutteringly grow in influence (economically, militarily and otherwise) they were always going to gently tug at the leash of US global dominance.

For South Africa – a small regional player, with anaemic economic growth and very moderate political/military influence – to have attached itself to the coattails of a kind of teenage rebellion by the powerful young global bucks is faintly ridiculous. South Africa winds up being drawn into a subservient relationship with China and Russia (over which it has almost no influence) and thereby flirts with the enmity of the real global adult whose judgements, when push-comes-to-shove, can be quite severe. That’s a lose-lose, as far as I can see.

Nothing wrong with the comment, although I wish I had made it clearer that I welcome Brics and I welcome the gradual receding of US power as much as I hope its retreat is orderly.

It’s not specifically about the Brics Bank (but it does mention it in context) but it is an excellent high level analysis of the growing contest between the US and China … and it argues that this is a matter of national security and national interest for South Africa.

Read the article … meanwhile, here are a few extracts:

“The emerging geo-political great game between the USA and China is of great importance to Africa and South Africa. How this great power relationship unfolds will have a commanding influence on the 21st century.

“The future cannot be known; but probability and prediction can be improved as well as surprise avoided, if we are assisted by facts – by a proper understanding of what is going on – as well as by quality information, good theory and off course, secrets.”

“In statecraft, the purpose of intelligence is to provide a competent decision-maker with an informational advantage in the context of national security and the pursuit of national goals.”

“The launch of the New Development Bank (NDB) and of the Contingency Reserve Fund (CRF) by the BRICS-countries in July 2014 is a powerful signal that developing countries are no longer willing to play second fiddle on the global stage.”

“The desired post-Bretton Woods era does not only contain different global financial institutions – not controlled by the USA – but some analysts believe, also rests on different values … the need to prioritize physical infrastructure over other priorities (such as education, healthcare, women’s rights, etc.) towards which the World Bank has been drawn in recent decades. From a holistic point of view, all such investments are crucial for equitable national prosperity and well-being, but nothing creates jobs and literally drives ‘state-building’ like infrastructure.”

There is much in the article that is worthwhile and I recommend it to anyone who is interested in the unfolding contest between the USA and China especially from a South African perspective.

Andre’s vantage point is especially interesting. He “is a former senior official in the State Security Agency of the democratic South Africa” and has previously “worked in the underground and intelligence service of the African National Congress during the struggle against apartheid and subsequently, served in the Presidential Support Unit under former President Thabo Mbeki” – those quotes from here.

For the record – and on the off chance that someone may one-day want some background on the (at time of writing) unresolved metalworkers strike – here are the bits and pieces I have published over the last two weeks; ordered from most recent at the top.

The piece from the eve of the strike was written jointly with my colleague (economist at BNP Paribas Cadiz Securities) and friend Jeff Schultz … and just while I am on that, well done Jeff on your accurate 25 basis point hike call from the SARB’s MPC.

(btw, I am publishing in something of a rush … I will attempt to clean up the formatting and editing over the next day or so.)

Numsa and SIEFSA – so near yet so far – 13th July 2014

The engineering strike has reached an impasse that is less insignificant than it first appears. Numsa, representing the majority of the 220 000 workers on strike, has gradually reduced its demand from 15% to 10%. SIEFSA is prepared to meet the 10% for the coming 1 year period but only if this is part of a 3 year agreement with 9.5% in 2015 and 9% in 2016. Numsa has rejected this offer (which SIEFSA subsequently withdrew) saying it will only agree to a 3 year agreement at 10% for each of the years

So what

The strike is entering its 16th day and the knock-on effects into the rest of the economy are severe; threatening our already anaemic GDP growth estimates.

Numsa has adequately jumped the hurdles to ‘prove’ that it is not opportunistically pursuing the industrial action purely as a way of building momentum towards launching a political party. By moving towards the employer organisation at each bargaining round (from 15% to 12% for 3 year agreements and then to 10% for a single year) but staying just out of reach of SIEFSA’s mandate, Numsa can now dig in its heals without losing the backing of those of its members who feel unwilling to be used in the Numsa leadership’s broader political game.

Numsa now promises to produce “a detailed Programme of Action (PoA) to intensify the (indefinite) strike action” – Numsa press release 14/07/2014. Numsa is hinting that this means getting other sectors in which it organises (especially the automobile manufacturing industry which is already negatively affected due to parts shortages) to strike in sympathy.

At issue here is that if our assumption that Numsa has ‘hidden’ motivations is correct, then predicting how and when the strike will end is that much more difficult.

Numsa’s trade union movement to the left of Cosatu and political party to the left of the ANC are an historical inevitability – and likely to garner significant support

A useful background article by Eddie Webster and Mark Orkin concerning the historical origins of, and potential support for, a ‘workers party’ appeared in Monday’s Business Day (15/07/2014). The article is based on “a large nationally representative sample of adults of all races” conducted in February and March this year and concludes that the party (which Numsa is pushing to form) could win as much as 33% of the national vote in an election. While we think these estimates are a bit rich, the article is a ‘must read’ for anyone wanting to understand the ideological origins and potential size of the initiative emerging from Numsa and other dissident Cosatu sectors and leaders.

To restate our oft restated view on this matter:

the initiative will cause heightened industrial unrest in the medium term (over 2 years) as the breakaway unions compete with established Cosatu unions;

the resulting ‘political initiative’ could push the ANC to a marginal hold on its absolute majority in future elections (potentially leading to more schizophrenic policies … but potentially having more positive impacts).

The National Union of Metalworkers is ready to fight – 30th June 2014

A strike in the engineering sector is on – and Numsa will attempt to extend the action to Eskom.

“The national executive committee has agreed to the decision from our members to embark on an indefinite strike action, beginning on July 1,” said Irvin Jim, general secretary of Numsa yesterday at a media briefing (SABC News).

Numsa claims membership of 341,150 (making it easily the largest union in the country) and it organises 10,000 companies across the motor, auto, engineering, tyre and rubber sectors – although it is officially only the engineering sector that is targeted by the strike (see here for the strike certificate and the full lists of all unions and employers involved in the dispute).

(Note that the strike is not directly in the automakers’ sector. Numsa took 30,000 workers out on strike here in 2013 – in an action that ostensibly led to BMW shelving plans for a big South African investment. However the strike will affect the auto parts sector and hence could impact directly on the automakers’ sector.)

Irvin Jim, Numsa Secretary said members would also picket the headquarters of state power utility Eskom on July 2 as part of a push for a wage increase of 12% – in a linked, but separate action. Eskom is defined as an “essential service”, making strikes illegal.

(Note that while the Eskom action is separate but parallel to the strike against SIEFSA, Numsa says that Eskom will feel the impacts of the main action because of the mechanical and engineering contractors on the Medupi and Kusile building sites.)

SIEFSA (the Steel and Engineering Industries Federation of South Africa) is the counterparty in the negotiation with Numsa (and five other unions). SIEFSA represents 27 independent employer bodies and 2,200 companies which employ over 220,000 hourly-paid workers – although 62% of those companies employ fewer than 50 workers (see the SIEFSA website here).

the potential impacts on the broader economy are profound – a characteristic that Numsa hopes to leverage off, helping to bring pressure on the employers represented in SIEFSA;

Numsa’s motivations include its political ambitions to set up a mass-based workers party – which makes the length of the strike and the tractability or otherwise of the union negotiators difficult to predict.

How government deals with Numsa’s apparent attempt to break the ‘essential services’ clause in the industrial relations regulatory framework is going to be interesting. Numsa is threatening to call 9,000 workers at the power utility out on strike after mobilising them through a protest action on Tuesday. “The intention is to move toward a full strike,” said Steve Nhlapo, Numsa’s sector coordinator for energy and non-precious metals. SIEFSA has offered a 5.6% wage increase and Numsa, coordinating its action across sectors, is demanding 12% (City Press 29/06/2014).

Numsa’s Industrial (political) action – June 27, 2014

Industrial relations

The possibility that 2014 would be another tumultuous year for South African labour relations looked good in January, and is coming true with a vengeance.

The cycle meets a secular trend

The five-month platinum sector strike – perhaps the most costly mining strike in the country’s history – and the metals and engineering workers’ strike from 1 July (based on confirmed reports in the media) might have happened as part of the normal cycle or normal part of the negotiation cycle – but we think the main drivers are secular.

NUMSA’s political ambitions coming to the fore

NUMSA has been moving towards a political divorce from the ANC and from the Ruling Alliance for several years – and in the last nine months has begun to talk explicitly about forming a ‘left’ or socialist party that will compete against the ANC. We do think NUMSA wants (and plans) to strike next week and we think its leadership hopes to turn this momentum towards building a political party (although we lay out several qualifiers in the main text.)

The risks to the real economy remain large

It is too soon to even estimate the numbers but a metals and engineering sector strike on the scale NUMSA plans could spell disaster for SA’s growth and investment outlook – at least in 2H 2014. We reiterate the large downside risks to our current 1.9% GDP growth estimate for 2014.

(The above is the summary, below is the body – Ed)

SA industrial relations: The cycle meets the secular trend

Our long-held view that the National Union of Metal Workers of South Africa (NUMSA) are looking to vigorously compete for membership with other COSATU affiliated unions in different sectors of the economy is at the forefront of our concerns here. We believe this week’s press release by NUMSA sums this up quite succinctly:In our 2014 Outlook document released in early January we highlighted our expectation for another tumultuous year for South African labour relations and our concerns therein. With the more than five-month-long strike in the platinum sector likely to be one of the most costly in the country’s history and confirmed reports this week that the metals and engineering industries are now about to embark on a strike from 1 July, our concerns seem to have been warranted.

“Our NEC wishes to send a congratulatory message to the courageous mineworkers for securing a decisive and historic settlement in the platinum belt. This settlement is not only a victory for mineworkers, but for workers in South Africa as a whole. The settlement secured after bitter battles between workers and the mining ruling oligarchy has called on workers to not simply unite beyond the logos or t-shirt colours of their unions. It has renewed workers battle assertion of “an injury to one; is an injury to all”.

“Furthermore, it has called on the progressive trade union movement to go back to basics, and not to be used by politicians to garner electoral support and parliamentary seats, while worker grievances and challenges remain unresolved. Doing so will continue to lead to the implosion of those trade unions that possess a rich heritage in our struggle.”
NUMSA and the numerous elements/questions to considerIt seems to us that the ‘normal’ cyclical nature of industrial action in South Africa’s winter months is now also meeting a trend specific to this political-economic moment. We believe NUMSA (and AMCU’s motivations) are playing a role here, as is the orientation of government and the ANC towards these unions.

The questions on our minds concerning Numsa since at least January this year have included: ‘will NUMSA engage in industrial action primarily to build momentum for its soon to be launched political party or movement?’; and: ‘will NUMSA ride the anti-ANC momentum implicit in the platinum strike – and implicitly and explicitly build a relationship with AMCU?’ and finally: ‘how will this mobilisation relate to the Economic Freedom Fighters?’NUMSA has been moving towards a political divorce from the ANC and from the Ruling Alliance for several years – and in the last nine months has begun to talk explicitly about forming a ‘left’ or socialist party that will compete with the ANC.

The EFF question is more difficult. NUMSA has been extremely cautious not to be seen to be sidling up to the EFF. NUMSA has widespread credibility and respect – and was a leading critic of Julius Malema’s ‘tenderpreneurial’ habits and the ‘proto-fascist’ nature of Malema’s mobilisation around mine nationalisation and expropriation of White-owned farm seizures. However, the actual policies of NUMSA and the EFF are extremely close, and, in our opinion, the EFF has successfully occupied a political niche very similar to the one the leadership of NUMSA would like to occupy. It would be in the interests of both the EFF and NUMSA to cooperate rather than compete directly – especially when they are both up against the ANC. This might end up resembling the careful courtship of porcupines – but we think it will be courtship nonetheless.We do think NUMSA wants (and plans) to strike and we think its leadership hopes to turn this momentum towards building a political party. And we do think that NUMSA is flirting, politely, with AMCU. On both these issues, however, we have many provisos, disclaimers and cautionary notes – which we deal with in the bullet points below.

Cautionary notes

A union, especially one as well organised and sophisticated as Numsa, understands that is does not have a free hand to pursue obviously political objectives around a wage strike. Strikes are costly to workers who are often indebted and whose lives and families can be seriously disrupted by a strike.

NUMSA’s grand ambitionsIn the NUMSA central executive committee statement this week, NUMSA presented its demands by stating “We have now made a significant compromise to decrease our wage demand to 12%”. This is NUMSA making sure it can say it has done what it can to avoid a strike while refusing to budge even one cent from 12%.

Remember too that in the communities where NUMSA’s membership lives, the African National Congress is electorally overwhelmingly dominant. Numsa must be cautious and limited in how it attempts to turn strike mobilisation into political mobilisation.

From the early 1990s, NUMSA has been the ‘left’ edge of COSATU and has long criticised the ANC – especially the fiscally conservative Growth, Employment and Redistribution macro-economic policy adopted in 1996. However, throughout the presidencies of Nelson Mandela and Thabo Mbeki, NUMSA made the assessment that there was more to be had by being within the Ruling Alliance than without it – an assessment that is probably true, given the pro-union regulatory and legislative labour regime that was developed during that time.

NUMSA conceives itself as occupying or potentially occupying the centre of the economy. The trade union aspect to its political ambitions is that it hopes to ‘vertically integrate’ along the supply chains of energy (including construction of generation capacity – Medupi, Kusile), mining (including smelting and associated industries) and metalwork/engineering/manufacturing.However, NUMSA has always harboured an ideology way to the left of the ANC, i.e., explicitly socialist. It preached caution in dealing with the ‘African nationalist political formation’ (i.e., the ANC) which would try to co-opt socialist unions into the struggles of an aspirant black bourgeoisie. NUMSA preached a kind of ‘partyism’ (the belief that unions should only support a worker’s party) and ‘workerism’ (a belief that unions should stay away from politics to avoid co-option by political parties). In many ways, where things are heading is rooted in NUMSA’s long held ideology.

The real economy

So what does all of this mean for the SA real economy and where do the risks lie?For almost 10 years, the National Union of Mineworkers (NUM) has been complaining that NUMSA constantly trespasses on its turf – poaching its members. NUM has also warned for many years that NUMSA has political ambitions driving its contestation for members with NUM and other COSATU unions. The seldom explicitly stated strategy (or fantasy) of the NUMSA leadership is that they can build a union or alliance of unions that can occupy the whole centre of the South African economy and spin or leverage that into powerful political influence – leading naturally to the formation of a mass socialist workers political party that contests with the ANC. We think this week’s actions by NUMSA are the next phase of these ambitions.

While we concede that it is a little premature to ascertain or quantify the 2H 2014 economic implications of the impending strike in the metals and engineering sector, we nevertheless find it necessary to highlight the risks and our concerns here.

The SARB calculate in its most recent quarterly bulletin that the impact of the loss of production in the PGM sector in 1Q thanks to strikes equates with a decrease of 0.3% in real GDP (or 1.3% at an annualized rate). The indirect effects of the strike (i.e., onto household consumption and the manufacturing sector, etc.) reveals that annualized GDP growth would have been around 2.2ppt higher at +1.6% q-q saar versus the headline 0.6% contraction (i.e., 1.3% due to direct effects and 0.9% due to indirect effects – (i.e., a ratio of 60/40). The current account deficit, the SARB estimates, would have been around 0.3ppt smaller than the 4.5% of GDP it registered in 1Q.

The Steel and Engineering Industries Federation of South Africa (SEIFSA) represents 23 affiliated employer associations, representing 2,072 companies and employing around 200,000 workers. Comparing the damage done to the local mining sector from the recent PGM strike which had only around 70,000 members down tools over three companies’ operations, the negative impact of this strike could prove to be much more damaging.

A breakdown of SA’s gross value add by sector indicates a risk to around 40% of the production-side of the economy (mainly direct). Add to this the massive risks to the country’s export base (being conservative, we roughly estimate such a strike has the ability to hinder at least a quarter of SA’s total export receipts), and the strong linkages between the manufacturing and mining sectors (from an intermediate inputs standpoint), and the outlook for the real economy in the second half of the year has the potential to be very damaging. We continue to highlight the large downside risks to our current 1.9% 2014 GDP projection as a result.Furthermore, next week’s purported strike action in the metals and engineering sector in gross value add terms accounts for a much more sizable chunk of the local economy’s GDP composition than just the platinum industry.

On my return on Sunday from 10 days relaxing in and around the unparalleled Lake Malawi a friend took me aside and said he had visited my blog and found only cobwebs, spiders and dust.

Forgive me.

So putting my shoulders back and girding my loins I logged on to deal with the decay and say something about the Numsa strike and the Brics bank when I noticed that I had had several ‘hits’ on a post from August 2010.

One of the (few) delights in running a WordPress blog is it generates several detailed statistics: the countries from which people have have visited the site, the search terms they followed and which posts they read … amongst other data.

I was intrigued to see what the the August 2010 post was about, so I read it. (It was only read by about 20 people over the last week, all from South Africa … but in my little world that is statistically significant, although of what I cannot say.)

It is interesting to go back to one’s opinions to check if they have shifted – or more interestingly, if they are unchanged or unmodified.

I suspect I am today slightly more bleak about the ANC than I was when I wrote the piece below; that I would say the same thing today, but with more of a grimace and the feeling more than ever that my hope really was a triumph over experience.

So, while I am tinkering around and deciding on whether I dare to borrow a picture from FT Online of Jacob Zuma looking like a lost child at the 6th Brics summit in Fortaleza, Brazil, here, unexpurgated, unedited and unreconstructed is:

Is the ANC really beyond redemption?

It is difficult not to imagine the tearing of some deep and important ligament in our body politic in the tone and content of this debate that starts in The Times, ostensibly between Pallo Jordan and Justice Malala and ostensibly about media freedom. The battle is joined – and complicated – by the ANC in its formal capacity in this unattributed article, by a reader’s reply to Justice Malala (K B Malapela’s article here) and a contribution by the redoubtable Paul Trewhela here.

My mother was taught at a Catholic convent in Johannesburg in the 40′s and part of the curriculum was a subject called “Apologetics”, which essentially means defending the faith and recommending it to outsiders. All of the contributions to this debate, to greater or lesser degrees, have the brittle quality of Apologetics. This is clearly not a debate designed to win over an opponent; it is much more a debate designed to slag off the opponent – to influence perhaps separate audiences.

This does not mean that the opponents are all just political propagandists rolling out set pieces in an archaic ideological struggle. The anger, hurt and perhaps even fear are real and personal. After studying each spit and snipe, each appeal to history and every egregious character assassination (of which there are many) I find myself uncomfortably ambiguous about where my sympathies lie.

When we strip out all of the detail, at issue is the clash of these two broad assertions (this is definitely my formulation – the actual words or even ordering of arguments – will not necessarily be found in this form in any single contribution to the ‘debate)’:

The one view attacks Malala and defends the ANC – in the general context of supporting legislation to make the print media legally accountable. It goes something like this: ‘The ANC, admittedly imperfect and flawed, is thenational liberation movement that led the struggle against Apartheid; the organisation whose members and supporters paid the overwhelmingly highest price in the struggle against Apartheid and it is currently the political party in which resides the main hope of building a South Africa free of Apartheid and its vestiges (which are still strongly present and primarily injurious to black South Africans). Given this truth, the depth and ferocity of Justice Malala’s attack on the organisation can only be explained by him having made a profession out of attacking the organisation for the benefit of a self-satisfied and confirmedly racist audience – or that he serves some darker and deeper purpose of enemies of South Africa.

The other view defends Malala and attacks the ANC – in the general context of opposing legislation that seeks to control the media. This argument goes something like this: “The ANC has no claim to an exclusive role in the struggle against Apartheid and in any case the ANC’s contribution to that struggle was always flawed and undermined by deeply anti-democratic (or Stalinist) traditions and brutal repression of internal dissent. Justice Malala is part of a tradition of journalism in South Africa that has fought government censorship and general government abuse of power. Abuse of power, in various forms, characterises the ANC government today and it is right, fitting and brave for Malala to continue to ‘speak truth to power’.

I was going to paraphrase each article and attempt to draw out each essence but it’s probably better that you do that for yourself.

But here, for those who are interested, are my considered opinions on the issues that I think lie at the heart of this debate.

Firstly, regimes can reach a point where the only strategic option is complete non-engagement; where the only way forward is the destruction of that regime and its replacement by an alternative. But it is ludicrous to argue that this is where we are in South Africa with regard to the ANC government. Much of our political commentary and journalism seems to be phrased in these terms – as if we are all revolutionaries now, beyond any hope or care of reforming the system. This view is both implicit and, to a lesser degree, explicit, in the words of Malala and Trewhela. I am all for gung ho evisceration (by written word) of corrupt and pompous politicians, but there is a not-so-subtle line between vigorous – even exuberantly irreverent – criticism and the argument that government per se is the problem and therefore cannot be part of the solution. Many aspects of this government’s performance are deeply disturbing – as is the seeming avalanche of cronyism in our political culture. But I am absolutely clear that a government that continues to command around 70% of national electoral support (primarily because that electorate perceives the government as the main heir to the mantel of national liberation movement) has got to be engaged with, has got to be encouraged to be “the solution” more than it is “the problem”. And anyway the ANC, government, Cabinet and ‘the state’ in all of its manifestations is not some undifferentiated monster that requires slaying. The most important debates that shape our future take placewithin the ANC and the government as much as they do in the national media or in Parliament. Who wins and who loses within the ANC remains a decisive question that we cannot abandon as “irrelevant”.

Secondly, the ANC’s claim to legitimacy based on its historical role as the leading organisation representing black South African’s aspirations for national determination and in opposing Apartheid is a false claim. That the ANC was the main formation thrown up by Apartheid oppression of black South Africans is indisputable and that legions of its supporters, leaders and members fought bravely and suffered deeply is equally indisputable. But how often in the world have we seen claims of historical suffering and historical struggle against oppression justifying present corruption and brutal repression? The ANC needs to hear the claims of some journalists and commentators that the ANC of todayrepresents a radical discontinuity with that ANC of the past. This is a legitimate assertion that can only be answered with specific claims to value based on present activities and achievements.

Too often the ANC’s claim to legend, previous heroism and fortitude, to banners and flags and songs, is the only answer it seems able to give to those who say it has become an unsalvageable cesspool of greed and self-interest.

The ANC needs to be reminded of the words of the great African revolutionary leader, strategist and philosopher, Amilcar Cabral (here I quote the first and last few sentences of this famous statement):

Always bear in mind that the people are not fighting for ideas, for the things in anyone’s head. They are fighting to win material benefits, to live better and in peace, to see their lives go forward, to guarantee the future of their children. . .

I have absolutely no idea how I justified to myself putting that Amilcar Cabral quote in the original … the link to the rest of the story is faintly tenuous. But I suppose I loved it when I first read it in about 1981 and I love it still … and any excuse to get others to read it will do.

Do I still write such long, unbroken paragraphs?

I will only be able to check whether all the links in the original article work at some future, unspecified, time … apologies if they (the links) took you to a place even more dusty, cobweb infested and spider-ridden than where you are right now.

There is something strangely compelling about Chris Griffith’s now infamous comments about his salary and perks – published in Business Day last week.

Remember these are the words of the CEO of Amplats, the biggest platinum company in the world. It cannot have escaped your notice that a bitter and grinding strike throughout the South African platinum sector is entering its 17th week. The Business Day story about the comments also refers to the 2013 Amplats annual report that mentions Mr Griffiths was paid R17.6m, of which R6.7m was a basic salary, for that year.

I have put the following quotes from Chris Griffith in the order in which they appear in the story but they did not necessarily flow together like this in the original interview:

If this debate is around the comparison of CEO pay and somebody else, then we’re completely missing the point. There is a greater supply of lower-skilled people … What the unions are doing is putting more people out on the street … Am I getting paid on a fair basis for what I’m having to deal with in this company? Must I run this company and deal with all this nonsense for nothing? I’m at work. I’m not on strike. I’m not demanding to be paid what I’m not worth.

Since then Griffith has apologised, saying:

I wish to apologise to the employees of Anglo American Platinum and the readership for comments I made in a Business Day article on Wednesday … My choice of words was inappropriate and a poor way to describe the extremely challenging situation we find ourselves in.

But the truth of the matter is that Griffith’s original comments are clearly what the company believes because this is what it does. Everything else is public relations and spin.

At the AGM of a listed company shareholders vote approval or otherwise of executive remuneration. So in one way or another the actual owners of this company are happy to pay Griffith’s fee. The company either believes he is worth that (and they pay him for it) or they do not believe he is worth it (and they pay him less … and perhaps he doesn’t accept the job.)

This might feel monstrous and unfair to you and me – especially when we read of the hardship experienced by the workers on those mines and the sacrifices they seem prepared to make to improve their lot. But in the world in which these hugely powerful companies operate, supply and demand is the basic mechanism that determines the price of everything.

I don’t like euphemisms – it is (almost) always better to see the snarling teeth of the beast rather than to be beguiled by its fake smile.

The whole exchange reminds me of a P. J. O’Rourke essay I read several years ago.

He’s talking about bigotry in apartheid South Africa (and be warned he uses language often considered to be rude or impolite*):

Everywhere you go in the world somebody’s raping women, expelling the ethnic Chinese, enslaving stone-age tribesmen, shooting communists, rounding up Jews, kidnapping Americans, settling fire to Sikhs, keeping Catholics out of the country clubs and hunting peasants from helicopters with automatic weapons. The world is built on discrimination of the most horrible kind. The problem with South Africans is they admit it. They don’t say, like the French, “Algerians have a legal right to live in the sixteenth arrondissement, but they can’t afford to.” They don’t say, like the Israelis, “Arabs have a legal right to live in West Jerusalem, but they’re afraid to.” They don’t say, like the Americans, “Indians have a legal right to live in Ohio, but oops, we killed them all.” The South Africans just say, “Fuck you.” I believe it’s right there in their constitution: “Article IV: Fuck you. We’re bigots.” We hate them for this. And we’re going to hold indignant demonstrations…until the South Africans learn to stand up and lie like white men.

That’s P. J. O’Rourke, Holidays In Hell, Atlantic Monthly Press, 1988. It’s very, very funny – albeit irritatingly smug and right-wing. I have long since lost the book, but I found that quote here.

(Below anxiously added a few hours after initial publication.)

* And be further warned that he (O’Rourke) is sneakily winking at apartheid … weellll, at least they**don’t lie about it!

** And be even further warned that he talked about “South Africans” in 1988 as if the term referred elusively exclusively to white South Africans who supported apartheid.

(Lawdy, enough already! Just leave it alone, the damage is done – Ed.)

(… and finally, despite Ed’s protestations, and after having glanced over this several weeks after publishing it: PJO also failed to understand the systemic and systematic nature of apartheid …. ‘hunting peasants from helicopters’ is an outrage, but comparing that to ‘apartheid’, the specific historical system of government and social control for a whole country, is a category error.)

I am up to my neck in it, trying to tease out the main implications and trends of the election – in a way that might be useful to investors in our financial markets.

As part of the process I read everything I can find that has been written about the elections. I have just read the Sunday Independent to see what the journalists and columnists had to say and I came across something that I felt I needed to share; and social media granted me immediate gratification.

Jeremy Cronin, deputy general secretary of the SACP, wrote a column assessing the election under the title “No room for complacency for ANC and alliance partners”.

Cronin is always good value and worth reading and today he was especially feisty.

Opposition emerging to the left of the ANC/SACP/Cosatu alliance is an important matter for anyone who has an interest in how South African politics will progress. And Cronin deals with this question as part of his election assessment.

Cronin’s tone reminds me of the sectarian and slightly Stalinist tendencies that I was very much part of throughout the 80’s … and I felt almost nostalgic when he characterised the threats from the left thusly:

Will a serious left challenge now come from outside the ANC alliance? It’s possible, but only if we in the ANC alliance are clumsy or arrogant. We need to distinguish the proto-fascist demagogy of Malema from the hybrid neo-Stalinist business unionism of Irvin Jim, from the ethnically-tinged vigilantism of the Amcu leadership, from the preachy capitalist philanthropy of Jay Naidoo and Mamphela Ramphele.

I wanted to follow that with a few exclamation marks. It’s funny and it has a certain poetic rolling cadence that left me smiling … for a few seconds.

Until I realised that the trick Cronin has pulled here is he has created a sort of ideological bestiary and placed within it every conceivable left critic of the ANC and the SACP.

If you are a left critic of the ANC, SACP, Cosatu alliance then you are either a proto-fascist demagogue or a hybrid neo-Stalinist business unionist, or you might be an ethnically-tinged vigilante or even a preachy capitalist philanthropist. You certainly couldn’t be a principled socialist of some kind, because then you would be in the ANC/SACP /Cosatu. Dah!

“Clumsy or arrogant”?

The article is worth reading because it gives a mostly subtle and thoughtful assessment of the election from an insiders view, but is, as you can see from the excerpt, occasionally entertainingly clumsy and arrogant.

After fiddling around a bit, I found it at IOL.com. Read it, it is here.

(Part of this is from a news update I published for the clients of BNP Paribas Cadiz Securities on Monday – 07/04/2014. Thanks as always to them for allowing me to republish here a few days later. None of opinions expressed here are those of BNP Paribas Cadiz Securities.)

Nigeria’s GDP rebasing is normal and welcome – for South Africans as well as foreign investors. Reading some of the media coverage, however, one might have thought a grave threat to South Africa’s sovereign interests had suddenly arisen somewhere in the north on Sunday morning

HIV infection rates are up and caution and prevention are down in South Africa – a more serious matter than how Nigeria estimates the size of its economy

Cosatu and Vavi’s brief reprise will both be threatened at this week’s Central Executive Committee meeting. The quicker and more fundamental the impending split, the better

Noisy nation – Nkandla is actually most relevant for the “screaming and shouting at the powers that be” and is a sign of rude health – John Carlin in City Press (06/04/2014)

The issue that made the biggest media impact on the weekend happened on Sunday, too late for the main weeklies. Nigeria’s Bureau of Statistics announced that the country’s GDP for 2013 was 80.22 trillion naira (between $509.9 billion and $477.98 billion depending on what value you give to the naira) and not the 42.3 trillion naira previously estimated. Nigeria had last assessed the size of its economy in1990 and has long realised it needed to add previously uncounted industries like telecommunications, IT, banking, insurance, music, airlines, online retail and the vibrant Nollywood film industry.

So what?

Not unexpectedly the announcement set off a flood of global media commentary (and local hand-wringing and defensiveness) about the sad state of the South African economy, which prior to the announcement ‘had’ Africa’s largest GDP at about $353 billion.

The Wall Street Journal Online (06/04/2014) probably had the most representative coverage:

“Nigeria’s ascendance marks a validation for foreign companies diving into Africa’s riskier markets, where populations are young and growing fast.”

“For South Africa, losing its status as Africa’s top economy is more than a symbolic blow. Pretoria has used its position on the continent to argue for inclusion at the table of the world’s most powerful nations. It joined the G-20 in 1999 and the “Brics”—Brazil, Russia, India, China and South Africa—in 2010. It has also campaigned for a U.N. Security Council seat.”

The article discusses Nkandla and South Africa’s anaemic growth (and Eskom’s wet coal) but also points out that South Africa has the continent’s best infrastructure and that it produces 10 times more electricity than Nigeria for a population one third the size.

A more salient point came from several Al-Jazeera interviews with Nigerians, best summarised by Bismarck Rewane, CEO of Lagos-based consultancy Financial Derivatives: “Is the money in your bank account more on Sunday than it was on Saturday? If you had no job yesterday, are you going to have a job today? If the answer … is ‘no’, then this is an exercise in vanity.”

Equally, the myriad problems in the South African economy were no worse on Sunday than they were on Saturday. Will Nigeria’s rebasing create more urgency amongst South African policy makers? I doubt it.

HSRC update on HIV/AIDS in South Africa is concerning

The Human Sciences Research Council has released research that indicates that the proportion of South Africans infected with HIV has increased from 10.6% in 2008 to 12.2% in 2012 and that the total number of infected South Africans now stands at 6.4 million, 1.2 million more than in 2008.

The table below indicates HIV prevalence in females (a) and males (b) by age in South Africa in 2008 and in 2012 (South African National HIV Prevalence, Incidence and Behaviour Survey, 2012 – xxvi of the Executive Summary):

Provincially, KwaZulu-Natal has the highest HIV prevalence (16.9%) and the Western Cape the lowest (5%). There were 469 000 new infections in the country in 2012.

So what?

HIV/AIDS was a significant area of risk associated with investing in South Africa in the late 90’s and early 2000’s and the disease radically lowered life expectancy in the country (from 62 years in 1990 to 50 years in 2007 – StatsSA). The impacts on consumption, the price of labour and pressures on social infrastructure were endlessly explored in research reports, also by this analyst.

There have been admirable increases in treatment levels (especially by government, but supported by non-governmental organisations) but significant declines in condom use and knowledge about the disease (particularly amongst young people) and recent increases in infection rates imply that the availability of treatment might be leading to complacency and a reversal of some of those gains. Watch this space.

Cosatu has a week of the long knives ahead – which is mostly a good thing

As it happens there was a considerable amount of drawing-back-from-the-edge this week raising interesting questions about the role of Ramaphosa and of Vavi … but I will explore that next week. Meanwhile here is the Monday comment, without retractions:

On Friday the South Gauteng High Court set aside Cosatu suspension of its general secretary Zwelinzima Vavi on technical grounds. “While the CEC of Cosatu was authorised to suspend Vavi” said Deputy Judge President Phineas Mojapelo, “it failed to comply with the constitution of Cosatu in that they did not vote whereas the constitution expressly called for a vote.”

This is obviously not a crushing victory in Vavi’s favour, but it does lay the grounds for some sort of final showdown at Cosatu’s Central Executive Committee meeting that starts tomorrow morning. (It would be a relatively simple matter for the CEC to vote to suspend Vavi … and it might do this and add suspending or expelling Numsa into the bargain.)

So what?

Cosatu is fundamentally split between two broad factions.

One faction, centred around Vavi, Irvin Jim and the National Union of Metalworkers of South Africa, oppose key elements of ANC economic policy on the grounds that the policy (particularly the NDP) is ‘pro-business’ and fails to adequately address the needs of workers and the poor. Further, this faction has expressed itself in very clear language against what it sees as the abuse of public resources for personal gain by key ANC and government leaders, including Jacob Zuma. This faction wants a formal Cosatu break with the ruling alliance and has hinted at its intention to establish a socialist workers party at some time in the future.

The other faction – essentially the incumbent Cosatu leadership including its president S’dumo Dlamini – is attempting to keep as much of Cosatu as possible within the alliance with the ANC and is, essentially, loyal to the incumbent leadership of the ANC.

The tensions that are expressed in this split have been present since Cosatu’s formation in Durban in 1986. The fact that the underlying political and ideological divisions are coming to a head now is not primarily because the ANC or government leadership is more corrupt that previously and certainly not because ANC economic policy is more pro-business than previously. The ANC and government’s adoption of the National Development Plan (as well as government’s promulgation of both the youth wage subsidy and Gauteng e-tolling, against Cosatu’s explicit and bitter opposition) has forced the underlying division into the light but the division was eventually going to be exposed anyway, as the sentimental glue of ‘the struggle’ gradually dissolved through exposure to the (famous) ‘ravages of time’ and the accumulation of normal, difficult, choices all governments must make between ‘national’ as opposed to ‘sectional’ interests.

(Gosh, that is a long sentence – Ed)

The bright light that Vavi and Numsa shine on corruption is welcome (but not untainted by other political considerations) and a healthy part of our democracy. This faction heading into the wilderness to set up a ‘left’ or socialist party would also be an expression of maturity – as well as a welcome release of the ANC from the tiresome shackles of its increasing anachronistic alliance with a trade union federation.

Nkandla in perspective

The Sunday papers are invariably a tiresome chore to read with only a handful of articles making it worth the effort. This week John Carlin (best known for his excellent writing about politics and soccer) dealt with the Nkandla scandal in a manner that brought some blessed relief.

In an article entitled “Noisy Nation” he delightfully describes the health of the South African democracy thusly: “The amount of screaming, shouting and booing at the powers that be, the furious debates between political parties and old and new trade unions, the daily revelations in the press, the hyperventilating opinion columns: it is all music to the ears, a sign of political health – just as a new born baby’s screaming is a sign of physical health.”

Among the welcome reminders he brings is that South Africa is a new democracy with regard to peer comparisons and that freedom of expression and levels of public debate compare very favourably:

“At 20 years old, it (South Africa) has barely emerged from adolescence and is still seeking its identity, finding its bearings in the world. The parents, by which I mean (stretching the metaphor a bit) successive ANC governments, are not a model of maturity themselves, but they have had the wisdom and moral coherence not to do as governments have done in other countries that arrived at democracy at roughly the same time, such as Russia. They have not locked up political opponents or murdered overinquisitive members of the press.”

Well, not yet and not that we know of, but the point is well made and well taken.

An aside on our irritating exceptionalism

(Not published as part of the original note.)

In addition to the wonderful ‘noisy, healthy nation’ point, Carlin takes a carefully balanced and nuanced shot at South Africans’s tendency to believe both that we are uniquely victimised by a history and that we were miraculously saved by rare and unusually heroic individuals.

I would much prefer you to read the whole of Carlin’s article as it appears on City Press’s website – here is a link – but for those who are unable to do this I am going to take the liberty of publishing the introductory paragraphs to the article – so that some of Carlin’s nuances are preserved:

A South African lawyer was in New York in the late 1980s to deliver a paper on apartheid’s crimes.

Before his turn came, he heard speakers from Latin America tell their tales of horror and realised, with a sinking feeling, that he could not compete.

The man from Argentina spoke about the torture and disappearance of 15 000 people, most of them grabbed from their homes.

The one from El Salvador spoke about the 30 000 killed by the state death squads at the rate of 1 000 a month.

Worst of all, the one from Guatemala shared similarly prolific rates of assassination, plus army units that routinely burnt entire villages to the ground.

Yes, in South Africa you had death squads killings, but not on an industrial scale.

Yes, when I arrived in South Africa in 1989 you had some 30 000 activists detained without charge.

But as I pointed out to the lawyer, in El Salvador those 30 000 would have been dead.

As for Nelson Mandela, the notion that his equivalent in Guatemala would have been tried in court and then spared the hangman’s noose was, in a grim sort of way, laughable.

I knew about these things. I had spent from 1979 to 1989 in South and Central America.

By contrast, South Africa’s political climate struck me as mild; the space for political expression, relatively free.

From the day I arrived in South Africa, I never came across a black person afraid to express his or her view.

I am not being frivolous about the suffering black South Africans endured under apartheid.

It was, as Mandela once said, “a moral genocide”, an attempt to systematically exterminate an entire people’s self-respect.

It was also a brazen affirmative action programme for white people, the inevitable downside of which was that those born with darker skins were condemned to lives deprived of economic opportunity.

It was uniquely evil. Well, almost.

In Guatemala, the 75% of the population who were of Mayan origin, were treated with at least equal contempt by the rich and powerful, who then dispatched battalions of Eugene de Kocks to terrorise them into submission.

I was struck in a similar way when I visit Serbia some time ago. This is what I said, also about South African ‘exeptionalism’, at the time (here for the original post)

It (the suffering in the region) started with the Celts invading the “Paleo-Balkan tribes” … who in their turn were replaced by an endless Roman occupation; sacked by Attila the Hun in 442 and then one thousand five hundred years of bloody, impossible to follow conquest, resistance, sacking, rapine, pillage … I could go on and on … (and you do – Ed.)

And of course, that is only before the First World War, and as you know all the important stuff happened since then.

I know our African and South African histories are important and it is appropriate that we wrestle as long as it takes – which will be forever, obviously – with the ongoing consequences of slavery, colonialism and apartheid.

But being here does tempt me to wish my countrymen and women had a slightly less myopic view of our own trials and tribulations. I read this morning that Belgrade is trying to scrape together the finances to build a memorial to Judenlager Semlin, the largest German-run concentration camp in Southeast Europe where in May 1942 the Nazi’s proudly announced one of their first major European campaign successes: Serbia was “Judenfrei”. The men had been executed earlier, but the last 7000 Jewish women and children were killed in the camp in the first few months of 1942.

By May Serbia was Judenfrei.

And this is not a The Holocaust trumps all kind of statement – I just mention it in the context of the previous 2000 years of European history.

The Germans might have achieved a unique scale with their technological and organisational excellence, but the great rivers of cruelty and tears are old, deep and cold here, and they flow through every valley of this geography – and not only to and from the mighty lake that was The Holocaust.

At an earlier time I discussed our (equally irritating) ‘leadership exceptionalism’ (here for original post) where I said:

… this country has developed a habit, possibly a mythology, of what I term “leadership exceptionalism”. In short this refers to the belief, erroneous or otherwise, that South Africa has achieved an unlikely stability primarily through the exceptional quality of leaders throughout the society – including on both sides of the Apartheid fence and in the churches, trade unions and business.

Perhaps you are a journalist covering the May 7 elections or the Oscar Pistorius trial – and will soon be immersed in Shrien Dewani’s adventures in our specialist niche of the honeymoon-tourism market.

You might be a TV continuity announcer-cum-journalist, circling endlessly between serious discussion about bone fragments, Nkandla’s fire retarding swimming pool, Numsa’s endless exit from Cosatu – and then back to Oscar standing up, Oscar sitting down, Oscar making gagging noises, Oscar weeping about how horrible and sad this whole business is for him.

If you’re very lucky you might get to do a colour piece on Zuma’s ‘shorty and the machine gun’ routine:

JZ with DJ Finzo Lannister at the the Fezile Dabi Stadium on Saturday – pic by Leon Sadiki in City Press 06.04.2014

But after the 10th showing of that, between the traffic, Oscar Pistorius, the sport, Oscar Pistorius and the economy … and Oscar Pistorius, even you must be having to fight to keep your food in your stomach.

I understand the private honour in doing something deeply distasteful and humiliating when this is the price of earning a living. So, in an attempt to provide us all with some light relief, I hereby republish and rework some ‘cynical quotations’ I have posted on a few occasions previously. Apologies to those long time readers who have seen these more than once … but this is a public service I feel compelled to render.

These are from the excellent Cassell Dictionary of Cynical Quotations (John Green – Cassel, 1994) with a few comments from the peanut gallery.

As we listen to politicians as we head towards May 7

People never lie so much as after a hunt, during a war or before an election.

Otto von Bismarck

There are hardly two Creatures of a more differing Species than the same Man, when he is pretending to a Place, and when he is in possession of it.

George Savile, Marquis of Halifax, Political, Moral and Miscellaneous Thoughts and Reflexions, c.1694

An Honest politician will not be tolerated by a democracy unless he is very stupid … because only a very stupid man can honestly share the prejudices of more than half the nation.

Bertrand Russel, Presidential Address to LSE students, 1923

Jacob Zuma

An honest politician is one who when he is bought will stay bought.

Simon Cameron, 1860

In general, we elect men of the type that subscribes to only one principle – to get re-elected.

Terry M. Townsend, speech 1940

That a peasant may become king does not render the kingdom democratic.

Woodrow Wilson, 1917

Anybody that wants the presidency so much that he’ll spend two years organising and campaigning for it is not to be trusted with the office.

David Broder, in the Washington Post, 1973

When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.

- P. J. O’Rourke

Should you bother voting at all?

Bad officials are elected by good citizens who do not vote.

George Jean Nathan

… yes, but (and forgive the emphasis here on the over-cynical … and slightly fascist):

Democracy is the name we give to the people each time we need them.

Robert, Marquis de Flers and Arman de Cavaillet, L’habit vert, 1912

A democracy is a state which recognises the subjection of the minority to the majority, that is, an organisation for the systematic use of violence by one class against another, by one part of the population against another.

V. I. Lenin, The State and Revolution, 1917

Parliaments are the great lie of our times.

Konstantine Pobedonostsev, 1896

Democracy is a device which ensures that we shall be governed no better than we deserve.

George Bernard Shaw

Democracy is a form of religion. It is the worship of jackals by jackasses.

H. L. Mencken, Sententiae, 1916

Now majority rule is a precious, sacred thing worth dying for. But like other precious, sacred things …. it’s not only worth dying for; it can make you wish you were dead. Imagine if all life were determined by majority rule. Every meal would be a pizza.

P. J. O’Rourke, Parliament of Whores, 1991

The democratic disease which expresses its tyranny by reducing everything to the level of the herd.

Henry Miller, The Wisdom of the Heart, 1941

Democracy is the art of running the circus from the monkey cage.

H.L. Mencken, 1916

On the ANC and the (infamous) liberal media

Democracy becomes a government of bullies, tempered by editors.

Ralph Waldo Emerson, Journals, 1909 – 14

EFF

It is a general error to suppose the loudest complainer for the public to be the most anxious for its welfare.

Edmund Burke – 1769

What seems to be generosity is often only disguised ambition – which despises small interests to gain great ones.

Francois, Duc de La Rochefoucauld, Maxims 1665

Revolution, n. In politics, an abrupt change in the form of misgovernment.

Ambrose Bierce, The Devil’s Dictionary, 1911

Every revolutionary ends up either by becoming an oppressor or a heretic.

Albert Camus, The Rebel, 1955

Fame is but the breath of the people, that is often unwholesome.

Thomas Fuller 1732

The urge to save humanity is almost always a false front for the urge to rule it.

H.L. Mencken 1956

Certain judges

A judge is a lawyer who once knew a politician.

Anonymous

The DA

What a liberal really wants is to bring about change that will not in any way endanger his position.

Stokeley Carmichael

An arbitrary comment about families

Sacred family! …. The supposed home of all the virtues, where innocent children are tortured into their first falsehoods, where wills are broken by parental tyranny, and self-respect smothered by crowded, jostling egos.

August Strindberg 1886

On love – and the current state of the ruling alliance:

The voyage of love is all the sweeter for an outside stateroom and a seat at the Captain’s table.

Henry Haskins 1940

On the global debt crisis and the Great Recession?

What is robbing a bank compared with founding a bank?

Bertolt Brecht 1928

or:

A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.

-Robert Frost

Bloggers (as a sort of author-lite) – in an attempt to be even-handed in my sneering

An author, like any other so-called artist, is a man in whom the normal vanity of all men is so vastly exaggerated that he finds it a sheer impossibility to hold it in. His over-powering impulse is to gyrate before his fellow men, flapping his wings and emitting defiant yells. This being forbidden by the police of all civilized nations, he takes it out by putting his yells on paper. Such is the thing called self-expression.

An irresistible opportunity for a caption competition arose when I saw this picture on Die Burger‘s webpage:

What is intelligence minister Siyabonga Cwele whispering in the ear of justice minister Jeff Radebe? What is Radebe thinking? I hesitate to ask.

Post your suggestions in the comments section below. The winner will receive a copy of the excellent ‘SA Politics Unspun’ by Stephen Grootes – which I will review here soon. The judge’s decisions are arbitrary and subjective … and seldom final.

That picture accompanies a story in Die Burger describing the alleged cover-up by the security cluster of public protector Thuli Madonsela’s Nkandla report – thanks to the person who pointed it out … catch the original here.

Below follows a sliver (‘slither’ as a young close relative of mine is wont to say) of my weekly politics summary and analysis from early Monday morning – I have stripped out some technical issues so what is left is little thin (although it was, frankly, a little thin anyway.)

The Democratic Alliance feels the stress of attempting to hold on to its old support base while pursuing a new one

Despite the 2014 election dates not yet having been announced, most parties are entering campaigning mode. (The elections must be held, according the SA Constitution, between April and July 2014). This weekend the Independent Electoral Commission held the second and last national voter registration drive and managed to register just under 500 000 new voters – and change the details of an additional 600 000 others (Independent Electoral Commission).

Election noise from almost every corner of the country is already deafening. Here are some of the highlights (and lowlights) from this past weekend:

Winnie appropriately dressed in Bekkersdal

Various leaders visited Bekkersdal, a community to the west of Johannesburg that has been plagued by violent service delivery protests and where many IEC registration booths were unable to open on Saturday morning. The most notable was Winnie Mandela who was “warmly received” by the community (eNCA). The twitterati and commentariat were obsessively interested to see whether she would arrive wearing red – indicating a possible defection from the ANC to the EFF. She arrived in ANC colours and spoke like a loyal ANC leader – for now, anyway. Registration booths opened in Bekkersdal yesterday.

Police minister stands his ground

Minister Nathi Mthethwa and several of his generals bravely faced down an extremely angry Khutsong audience (also west of Johannesburg) yesterday. Mthethwa visited the troubled area in the wake of last week’s vigilante violence in which 6 alleged criminals were murdered – by stoning and burning. Mthethwa, a close Jacob Zuma ally, stood his ground as audience members screamed at him and his senior officers, accusing the police of incompetence and corruption and threatening to fry criminals ‘like chicken’. Mthethwa urged the crowd to work with the police – and expose the area’s drug lords and corrupt cops.

The best action was on Twitter

Much of the off-beat action was on Twitter. A flyer portraying itself as having been distributed by the ANC Youth League promising a R60 car-wash by scantily clad young women near a registration station in Kenilworth (looks fake, but you never can tell). One tweet pointed out an essential difference between AgangSA and the EFF: “Agang launched with Tea and cakes, EFF slaughtered 8 Bulls” – which, in our opinion, nails down the difference between the two new parties rather well.

DA swerves

The Democratic Alliance continues to shudder from its ‘mistaken’ backing of the Employment Equity Amendment Bill in the National Assembly recently. It appears the flip-flop is based on tension in the official opposition between those who believe backing state interventions to reverse the relative exclusion of black South Africans from senior management positions as well as from other forms of ownership and control of the economy is essential if the DA is to win black votes. The South African Institute of Race Relations quoted in the Business Day on November 6th says: “DA support for this kind of racial engineering will come as a shock to many of its current supporters.” As it happens Helen Zille backed away from supporting the bill and has reshuffled her shadow minister of labour, Sej Motau. Tension around this matter will remain and grow in the party.

Forgive the dearth of postings here … I was brought low by some late winter dreaded lurgy and as a result my life came to grinding halt for almost two weeks.

The big story (which I will deal with later today or tomorrow) is the astonishingly decisively manner in which the ANC and its government is blocking Cosatu on a whole range of policy issues … immediately prior to an election.

Later today I will attempt to assess whether the medium-term budget policy statement holds the same line, particularly with regard to the public sector wage bill. If it does then I am going to have to start reassessing whether Jacob this-isn’t-some-African-shithole Zuma is quite as soft-in-the-middle on policy as I have previously asserted. The implications of the putatively shifting position are huge and, I suspect, driven by a complex and contradictory set of factors.

Meanwhile here is an excerpt from my weekly news commentary describing the rising decibels and pitch of the moan coming from business and its representatives (and from financial markets in general) around policy, especially policy related to the labour market. The ascending pitch and loudness of the whine are undoubtedly two of the factors pushing Zuma’s showdown with Cosatu – but I think it would be premature to think of the president’s actions as primarily about bowing down to business and the diktats of global capital markets.

South Africa deteriorating investment destination

Complaints about South Africa’s hostile policy environment are getting louder.

Pepkor chairman Christo Wiese added his voice to a chorus complaining about a hostile investment environment in South Africa. In other African countries “infrastructure is improving, border crossings are becoming easier, more property development is taking place and, in some cases, they are offering more opportunities.” But in South Africa government is “certainly not cooperative” and “one is left with the impression that government sees business as the opposition, not as a partner … you can’t have German rules because we can’t administer them,”

The wizened and iconoclastic Christo Wiese held up Angola, Nigeria and, especially, Rwanda as improving business destinations. South Africa’s labour regime, according to Wiese, is becoming one of the greatest inducements to invest in other African countries. (Wiese was quoted in an interesting interview with Chris Barron in the Sunday Times 22/10/2013 – here’s a link to the republished article in Business Day … Barron is always interesting and not to be missed in your weekly news read.)

Wiese’s comments came soon after Moody’s Investor Services said in a credit opinion on 12 October that South Africa’s elevated strike activity continues to affect the investment climate. “BMW’s announcement that South Africa has been removed for consideration for the new car is tangible evidence of the negative impact that the increase in work days lost to strikes in the past two years is likely to pose for the medium-term outlook of the economy … Such decisions are likely to be repeated by other companies when such significant losses are incurred -” Bloomberg and Moody’s Credit Opinion 12/10/2013.

In the same week Amplats CEO Chris Griffith said (after the company was again battered by strikes) that it “is not possible that we can continue with these kinds of strikes, which are having an effect not only on the mining sector but all sectors of the economy. It’s hurting the economy … It is impacting jobs” – Business Day 16/10/2013.

From extensive plans to cut 230,000ozs of achievable platinum as well as 14 000 jobs announced in January this year, Amplats appears to have been steadily successfully bullied back by unions, government and the ANC from doing what it initially intended.

Read against South Africa’s scores in the recent WEF Global Competitiveness Report 2013 – 2014 (click here for a full copy) some of this anxiety seems justified. While South Africa is ranked 53rd this year out of 148 countries, the quality of the educational system is very poor at 146th, as was labour market efficiency at 116th – and ‘hiring and firing practices’ and ‘wage flexibility’ at 147th and 144th respectively. The ability of the employer to respond quickly to changing production needs for skills and size of workforce is called ‘labour market flexibility’- and aggregating our performance in these categories suggests a serious deficit compared with our peers.

Okay, so that sets the background for a follow-on post (today or tomorrow) dealing with the now unavoidable conclusion that Zuma’s government appears to be risking the wrath of its left-wing allies with regard to a range of policy measures. The important question to answer is ‘why’ is the ANC drawing the line? And why now?

Jacob Zuma has forced me to reread Niccolò di Bernardo dei Machiavelli’s The Prince, published 500 years ago this year.

He (Jacob Zuma) didn’t threaten me with the red lightsaber or catch me in a honey trap. My natterings, fortunately, are not impactful enough to draw the attentions of the Dark Lord (Darth Vader, dah! – ed) or his stormtroopers.

The compulsion comes from watching, slack-jawed, as Jacob Zuma skips happily across the backs of starving crocodiles – on his way, off towards the welcoming horizon.

Surely the world was an intrinsically hostile place for a black baby boy, born to a single-parent mother (who was also a domestic worker) in the South Africa of 1942? Surely when he received no formal education any chance of success in life would have become vanishingly small – in the estimation of a wandering actuarial statistician, perhaps?

When Jacob Zuma went to prison and then later was repeatedly caught with his hands in all sorts of cookie jars I imagine the hypothetical actuary would have confidently predicted a life of ignominy and poverty.

But instead Jacob Zuma is picking up an honorary Doctorate of Leadership from the Limkokwing University of Creative Technology (who writes the script of the world? … no ordinary mortal would dare make this shit up – ed) and rubbing shoulders with the great and the good and undoubtedly stashing bits of his loot in safe houses in Malaysia.

My second post on this website in mid-2009 titled The Accidental President (catch that here) argued that Zuma’s rise was pure chance and contingency. But when the same random set of things happens over-and-over (Jacob Zuma escapes danger with a sack full of cash) you have to start questioning whether this is purely the shambolic interactions of events, people, history and the world.

Politics is about power (yes, I know, we have heard that somewhere before). Power is agency, the ability to make stuff happen, to make people do your bidding and to make situations turn out in a particular way. Political analysis is the analysis of how (and why) power is exercised.

Which brings me back to Machiavelli.

I read The Prince when I was about 17 and, clearly, I didn’t understand a bleeding word.

I vaguely remember being outraged and confused by the book. Bertrand Russell is widely quoted as having said The Prince is a handbook for gangsters (which is a great line but there is much debate as to whether the great logician himself actually said it).

However, I am now kicking myself that I haven’t been reading and rereading The Prince every year – and in the flush of my transient enthusiasm, I promise myself I will do so from now on until I die … or perhaps I will stop a little before.

(As an aside: I was halfway through the book when the Syrian nerve gas story broke. I was glad to have Machiavelli as a companion to think about how those with agency might cause, or allow, such things to happen and why they might do so.)

So, anyway … Jacob Zuma is the Prince and I doubt he ever needed a Machiavelli to tell him how to be what he is and how to do what he does.

Here is the opening dedication. It’s quite compellingly mysterious to those among us who are a little thin on our Florence-during- the-Renaissance, but it is also a good explanation of the work that follows:

Dedication: To the Magnificent Lorenzo Di Piero De’ Medici

It is customary for such as seek a Prince’s favour, to present themselves before him with those things of theirs which they themselves most value, or in which they perceive him chiefly to delight. Accordingly, we often see horses, armour, cloth of gold, precious stones, and the like costly gifts, offered to Princes as worthy of their greatness. Desiring in like manner to approach your Magnificence with some token of my devotion, I have found among my possessions none that I so much prize and esteem as a knowledge of the actions of great men, acquired in the course of a long experience of modern affairs and a continual study of antiquity. Which knowledge most carefully and patiently pondered over and sifted by me, and now reduced into this little book, I send to your Magnificence. And though I deem the work unworthy of your greatness, yet am I bold enough to hope that your courtesy will dispose you to accept it, considering that I can offer you no better gift than the means of mastering in a very brief time, all that in the course of so many years, and at the cost of so many hardships and dangers, I have learned, and know.

This work I have not adorned or amplified with rounded periods, swelling and high-flown language, or any other of those extrinsic attractions and allurements wherewith many authors are wont to set off and grace their writings; since it is my desire that it should either pass wholly unhonoured, or that the truth of its matter and the importance of its subject should alone recommend it.

Nor would I have it thought presumption that a person of very mean and humble station should venture to discourse and lay down rules concerning the government of Princes. For as those who make maps of countries place themselves low down in the plains to study the character of mountains and elevated lands, and place themselves high up on the mountains to get a better view of the plains, so in like manner to understand the People a man should be a Prince, and to have a clear notion of Princes he should belong to the People.

Let your Magnificence, then, accept this little gift in the spirit in which I offer it; wherein, if you diligently read and study it, you will recognize my extreme desire that you should attain to that eminence which Fortune and your own merits promise you. Should you from the height of your greatness some time turn your eyes to these humble regions, you will become aware how undeservedly I have to endure the keen and unremitting malignity of Fortune.Niccolò Machiavelli

……………………………………………………………..

I know how Niccolò feels. Sometimes these humble regions are just that little too humble. However, I would have been more cautious about calling for the Prince’s attention if I was Machiavelli. If the Prince read the little book, then the Prince would know that Machiavelli had the Prince’s number and that Machiavelli had rewritten the handbook. Which I can’t imagine would have charmed the Prince.

I will attempt a ‘highlights package’ of The Prince and possibly some learned comments (which are unlikely to be as good as you will find in this interesting article and interview). For the keenest among you, there are several places on the internet where The Prince is downloadable for no charge – I am sure the copyright has long expired … or rather I hope so. My copy, which is in electronic form on my laptop, originates at: http://www.feedbooks.com.

Finally, Jacob Zuma still has a few crocodiles to hop on before he reaches safety. I still think that the odds are against him, but I am not an actuarial statistician, wandering or otherwise . I draw comfort purely from the certainty that no-one, ultimately, gets out of this alive.

It is difficult to avoid an abiding suspicion that the protesters flinging faeces in the general direction of the DA led Cape Town and Western Cape provincial administrations are not always, as they claim, signed up members of the downtrodden masses.

Among the reasons I am suspicious is a good friend told me that when the recent group of 176 protesters carrying bags of shit – let’s call it what it is – were offloaded at Esplanade train station in Woodstock she couldn’t help but notice the pitter-patter of Carvella clad feet, the swish of Gucci handbags (in the hands not carrying the shit …. hmm, whatever) and the sleekly clad and buxom bodies diagnostic of a certain species of yuppie political activist.

So, yes … it is difficult to separate the reality from the hyperreality , so to speak, when it comes to the semeiotics of the ANC’s clash with the DA, especially in the Western Cape.

A more interesting take, one that doesn’t bother with the relatively minor question of political parties’ attempts to manipulate or ride the underlying grievances of the poorest and most marginalised South Africans, is an excellent article by Gillian Schutte on The South African Civil Society Information Service website (SACSIS describes it’s function as: “A nonprofit news agency promoting social justice. Seeking answers to the question: How do we make democracy work for the poor?”)

Schutte writes:

Though ‘shitting’ has to be one of the most taboo subjects around, it is a matter that we all deal with, on average once or twice a day. Defecation, and the rules governing it, undoubtedly comprises the complete gamut of human behaviour yet open discussion around it is deemed distasteful and disgusting. Indeed this is exactly how it played out when protesters dumped the contents of portable toilets on the steps of the Western Cape legislature in a backlash against the sanitation policy of Helen Zille’s administration. This policy offers communal portable flush toilets to shack dwellers at no cost — a system, which they say, is inadequate and often ends up filthy and untended.

Catch Schutte’s article here and I would recommend that you subscribe to the free SACSIS.org.za email service.

That being said, spare a thought for the put-upon DA premier Helen Zille and Cape Town mayor Patricia De Lille.

I stumbled across a thorough report from the Presidency (Department of Performance, Monitoring and Evaluation) into the state of sanitation services across the country. The report (download it here) makes a detailed comparison between provinces. I laboriously screen-snipped the graphs for provincial performances in informal housing areas and put them together in a graphic (which is a stretch for me, so I hope someone finds this useful).

This is what the scoreboard looks like:

(When you look at relative performance in formal areas the Western Cape also performs well, bested only by Gauteng – although, I suppose, it is not useful to run this like it was a competition. The ANC has faced rolling service delivery protests across the country for many years and the tit-for-tat between the DA and the ANC with regard to the toilet issue has almost nothing to do with ‘the facts’ or ‘the truth’.)

However the graphic does confirm that the DA has outperformed in relation to a crucial area of service delivery to informal areas – the very areas from which it is getting flack in Cape Town. And that raises an interesting point about the stability of societies as they move away from authoritarian rule and high levels of absolute and relative poverty.

There is a peculiar fact, confirmed across the world and over a long period of time, that improved service delivery itself is a good predictor of protest and disaffection.

I have an instinctive feeling of why this might be true. The uniformly downtrodden, those with no hope and no expectation of relief from ‘the powers that be’ are less likely to be moved to demand more.

Interestingly this is precisely the situation predicted by US sociologist working in the late 1950′s, James C Davies. His theory is that rising expectations are related to the possibility revolt but only when rising expectations – brought about by, for example, some degree of service delivery – meet an unexpected slowing in that delivery. His theory became known as the Davies J-curve.

Here is the point expressed graphically:

So the theory is that as a middle-class emerges from previously marginalised groups, as education and social infrastructure improves, the expectation of improvement begins to outstrip the maximum rate, or the sustainable rate, of real improvement. The first thing that happens is that resistance and dissatisfaction intensifies.

This is one of the many reasons transitions like ours can be scary and unstable. The old ways of doing things and the old, essentially stable, structure is abandoned before what is replacing it has moved in and filled the vacuum and the available space.

We are in the moment when ‘the old’ is gone but ‘the new is not yet born’.

In the 1980’s I unwittingly employed an apartheid police informer, Mark Behr, to work in the Institute for a Democratic Alternative for South Africa (of which I was a regional director).

Behr had a serious talent – and zest – for self-promotion. But he was also bright, ambitious and charismatic and I naively believed that all those characteristics together, could be harnessed for the good of the organisation, and ‘the struggle’ … (I know. We really called it that.)

As it turned out he was already in the employ of the Dark Side … and those who got the benefits of that self-promotion and ambition were the opposition to the anti-apartheid team.

Mark Behr was a lightweight apartheid agent and there is a part of me that wishes I could just put him and the sheer awfulness and banality of the apartheid security state machinery, and his role in it, behind me.

But unfortunately for me, someone pointed out last week that there is a Wikipedia entry on Behr that, when I accessed it on Friday (13/02/2013) said (without any cautionary remarks):

“Professor Behr is a well respected and acknowledged international author and experienced double agent that left South Africa for a safer lifestyle in the USA.”

The gradual santisation of Apartheid and the security machine that maintained it is disturbing to me for too many reasons to name here.

But that is less the issue for me in this particular story.

No matter how slow the historical fabrication happens, how tiny the incremental changes made to the record, there is no version of the truth in which Behr underwent “a process of political radicalization” or “turned double agent and spied on the South African government on behalf of the African National Congress” – or any similar heroic, tragic nonsense.

I know this because I was connected to the underground structures that dealt with Behr, heard his original confession and sent him home safely – a neutralised enemy agent; but also a narcissist and fantasist who, precisely for these reasons, could not be trusted to report back to the movement.

(I mean, please … Behr, in an attempt to have his credentials as an anti-apartheid activist improved, used a gun – and instructions – he got from his police handlers to shoot through an outside window into his room at his university home. He then ran back inside, and later, suitably disheveled and shocked, managed to convince the student body and administration that he was the victim of an apartheid hit-squad assassination attempt … a little story he managed to leave out of his confession that I cover below – probably because of its obvious buffoonery and because thousands of people still remembered how convincing was his feigned shock and ‘injured victim’ status at the time … and by the way – – this as an added afterthought – he also managed to leave out of his 1996 confession – see below – that he had been a “double agent”.)

Why am I bothering with this, all these years later?

Because Behr knows the truth … as do I. I am no longer certain anyone else remembers or cares. Behr could easily have corrected the hagiographic Wikipedia entry – but he has allowed this distorted tale, in which he is the dashing hero, and of which he is undoubtedly the author, to become the official version of a minor – but important to me – slice of our history.

In 1996 Behr made a dramatic and self-aggrandising (and unauthorised by the ANC) public confession at a writers conference in South Africa.

This is what I said at the time (published in the Mail & Guardian here) … I no longer have that condemnatory certainty, but as an antidote to the Wikipedia entry I cut-and-pasted above, I wouldn’t change a word.

Thus, purely for the record:

The Smell of Rotten Apples

PEOPLE who worked secretly or otherwise to undermine the movement against apartheid should be given every encouragement to say what they did and why. I am all for listening to them and forgiving those who are genuinely contrite.

Unfortunately the sincerity of Mark Behr’s confession is doubtful.

Even before one looks at the text it is difficult to believe that Behr is not engaged in another act of self-promotion. The initial signs are:

He flew in from Norway, delivered his confession and fled back overseas without facing those on whom he had spied;

He addressed himself to a conference of people interested in writing, where he was the star speaker, rather than to the ex-Stellenbosch students he had betrayed and the anti-apartheid activists on whom he had informed;

He revealed to close friends he was only coming clean because he was going to be named as a spy by a witness at the Truth and Reconciliation Commission;

He is publishing a book dealing with spying and betrayal early next year. One must assume his high-profile confession is part of an advance publicity campaign.

To grasp just how unlikely is Behr’s sincerity, we need to examine the text of the 4 000-word confession and apology.

A number of things are missing from the text. He never mentions the arm of the state he spied for, who his handler was, how much he was paid or what information he passed on. If Behr really wanted to redress some of the harm he did -—a crucial aspect of confession and forgiveness—- then these were the questions he should have answered. Instead of dealing with the details of what he did and for whom, Behr spends the overwhelming majority of his words worrying about how he will be judged. The repeated lament is: “I have always suspected that the only voice people will hear from that moment on … is the voice that cannot b e trusted, that is incapable of the truth.”

Aside from his exasperating self-absorption the problem with Behr’s words is their totalitarian thoroughness. Behr constructs his defence as a monolith. On reading the document we are left with the impression that there is nothing more to say except to forgive the poor chap, he is suffering enough already. There is no chink in the words for us to enter and engage with him. He has pre-empted any possible criticism by exhaustively criticising himself. He apologises for the betrayals, for his motivation, for his lack of moral courage; he apologises for apologising; and then, in an infinite regress, he apologises for apologising for apologising.

This is called “shutout”. We are left unable to engage with the truth. We can do nothing but acquiesce or reject him outright. If we reject him we place ourselves with those who deny perpetrators the right to change heart; to seek a language to express their grief and regret.

But to what are we being asked to acquiesce? If it was just forgiveness it would be easy. You have to listen to the rhythms of the text, the cadence of Behr ‘s voice to understand the enormity of what he wants from us. “It is with the profoundest imaginable regret …”, “I soon believed in the moral correctness of this struggle I was reporting on …”, “… this might be … yet another reinterpretation geared for justification …”, “I lacked the moral fortitude to face the consequences of my treason …”, “I … would like to capitulate into silence … there is also truth in silence as there might be in ceasing to live.”

Imagine a young version of the Reverend Jim Bakker – remember him? Then listen carefully to Mark Behr and you will hear something akin to the tearful televangelist minister who got caught sleeping with a prostitute – again. He is beating his breast, calling down the wrath of God on his sinner’s head, begging us to join the Lord in forgiving him. The individuals in the congregation are crying with him, wishing they could be the ones to embrace him, to soothe away the contradiction at the heart of this flawed titan of a man. Behr’s confession is a number of things. It is also an audacious attempt at seduction.

The Truth and Reconciliation Commission has begun bringing the painful stories of victims on to the centre stage of our history. As that process begins to take effect we are presented with Behr claiming to have been the victim: “… one is born into, loved into, violated into discrimination”. Behr claims to be the victim of propaganda, of Christian National Education, of his family, of history, of fate, of his own moral weakness. With all due respect! This is a man who spied for the apartheid police in exchange for money. He apparently didn’t even support apartheid. Ten minutes listening to the truth commission will clear the heads of anyone seduced into believing Behr is the tragic hero at the centre of our national drama.

I do believe there is something fragile and sacred in our process of confession and absolution. We all probably know white men who were, as conscripts, engaged in atrocities in Angola and Mozambique. We have watched them writhe in the terrible privacy of their own fear and shame. These men cannot even imagine words to describe where they have been and what they have done. We have all known someone amongst them who has descended into the hell of drug addiction or suicide.

Behr had the unique combination of talent and opportunity to examine how young whites became culpable. His confession could have begun giving them a voice.

But he misses his one chance at salvation. In an orgy of self-pity and self-promotion he abandons the only people who really needed him to speak with sincerity.

I hear that Behr’s confession was warmly received by many. Behr has consistently traded on his anti-apartheid credentials. I am appalled at the possibility that he will now get away with trading on his credentials as the contrite perpetrator, as the prodigal son.

Behr phrases his confession in the literary context of the limitations of memory and language to describe truth. He has extensive access to platforms that propogate his vision of the truth and a unique ability to manipulate language to do so efficiently. Behr is the fast-food chain in the market of truth. Perhaps in the neighbourhoods where they consume mediocrity three meals a day his version of himself and history will prevail.

Behr could be forgiven for spying on the anti-apartheid movement, even if it was for thrills and extra ready cash. But, quite simply, he would have to be sorry first. Not sorry for himself. Sorry for what he has done.

Nic Borain was secretary general of Nusas in 1985, and established a Nusas branch at Stellenbosch. He was regional director of Idasa Western Cape from 1988 to 1990, and during this time employed Mark Behr

I am an independent political analyst focusing on Southern Africa and I specialise in examining political and policy risks for financial markets.

A significant portion of my income is currently derived from BNP Paribas Cadiz Securities (Pty) Ltd.

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